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The Essential Commodities Act, 1955

An Act to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce, in certain commodities

Be it enacted by Parliament, in the Sixth year of the Republic of India as follows:

1. Short title and extent. — (1) This Act may be called the Essential Commodities Act, 1955.

(2) It extends to the whole of India.

2. Definition. — In this Act, unless the context otherwise requires, —

[1][(i-a) “Code” means the Code of Criminal Procedure, 1973 (2 of 1974), and]

[2][(ii-a) “Collector” includes an Additional Collector and such other officer, not below the rank of Sub-Divisional Officer, as may be authorised by the Collector to perform the functions and exercise the powers of the Collector under this Act;]

(a) “essential commodity” means any of the following classes of commodities:

(i) cattle fodder, including oil-cakes and other concentrates;

(ii) coal including coke and other derivatives;

(iii) component parts and accessories of automobiles;

(iv) cotton and woollen textiles;

(iv-a) drugs.

Explanation. In this sub-clause, `drug’ has the meaning assigned to it in Clause (b) of Section 3 of the Drugs and Cosmetics Act, 1940 (23 of 1940);

(v) foodstuffs including edible oil-seeds and oils;

(vi) iron and steel, including manufactured products of iron and steel;

(vii) paper including newsprint, paper board and straw board;

(viii) petroleum and petroleum products;

(ix) raw cotton, and whether ginned or unginned, and cotton seed;

(x) raw jute;

(xi) any other class of commodity which the Central Government may, by notified order, declare to be an essential commodity for the purposes of this Act, being a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 in List III of the Seventh Schedule to the Constitution.

(b) “food-crops” include crops of sugarcane;

(c) “notified order” means an order notified in the Official Gazette;

(cc) “order” includes a direction issued thereunder;

(d) “State Government”, in relation to a Union territory, means the administration thereof;

(e) “sugar” means —

(i) any form of sugar containing more than ninety per cent of sucrose, including, sugar candy;

(ii) Khandsari sugar or bura sugar or crushed sugar or any sugar in crystalline or powdered form; or

(iii) sugar in process in vacuum-pan factory or raw sugar produced therein.

[3][(f) words and expressions used but not defined in this Act and defined in the Code shall have the meanings respectively assigned to them in that Code.]

STATE AMENDMENTS

Himachal Pradesh:

After sub-clause (vi) of Clause (a) of Section 2, the following new sub-clause (vi-a) inserted, namely:

(vi-a) packing cases made wholly or partly of wood, card board or straw.

[H.P. Act 1 of 1992]

Maharasthra:

(i)  After the words “the context otherwise requires”, the following clause shall be inserted, namely:

(a-i)  `Controller’ in Greater Bombay means the Controller of Rationing and includes any Deputy or Assistant Controller of Rationing, and elsewhere means the Collector of the District and includes any Assistant or Deputy Collector or District Supply Officer within his respective jurisdiction.”

(ii)  After clause (b), the following clauses shall be inserted, namely:

(ba)  `holder’ in relation to any agricultural land, means the person in actual possession of such land and includes a company or other body corporate, firm, association, joint family or body of individuals in joint possession of such land;

(bb)  `holding’ means the aggregate of all lands in possession of a holder.

[Mah. Act 1 of 1976]

Comments

Cement — Is essential commodity. Amrit Singh v. State. 1995 Cri.L.J. 3771 (Delhi)

3. Power to control production, supply, distribution, etc, of essential commodities. — (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the Defence of India or the Efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade commerce therein.

(2) Without prejudice to the generality of the powers conferred by sub-section (1), an order made thereunder may provide, —

(a) for regulating by licences, permits or otherwise the production or manufacture of any essential commodity;

(b) for bringing under cultivation any waste or arable land whether appurtenant to a building or not for the growing thereon of food crops generally or of specified food-crops, and for otherwise maintaining or increasing the cultivation of food crops generally, or of specified food-crops;

(c) for controlling the price at which essential commodity may be bought or sold;

(d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal acquisition, use or consumption of, any essential commodity;

(e) for prohibiting the withholding from sale of any essential commodity ordinarily kept for sale;

(f) for requiring any person holding in stock, or engaged in the production, or in the business of buying or selling, of any essential commodity, —

(a) to sell the whole or a specified part of quantity held in stock or produced or received by him; or

(b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him,

to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Explanation 1. An order made under this clause in relation to foodgrains, edible oilseeds or edible oils, may, having regard to the estimated production, in the concerned area, of such foodgrains edible oil-seeds and edible oils, fix the quantity to be sold by the producers in such area and may also fix, or provide for the fixation of such quantity on a graded basis, having regard to the aggregate of the area held by, or under the cultivation of the producers.

Explanation 2. For the purpose of this clause, “production” with its grammatical variations and cognate expressions includes manufacture of edible oils and sugar.

(g) for regulating or prohibiting any class of commercial or financial transactions relating to foodstuffs, or cotton-textiles which, in the opinion of the authority making the order, are, or, if unregulated, are likely to be detrimental to the public interest;

(h) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters;

(i) for requiring persons engaged in the production, supply or distribution of, or trade, and commerce in any essential commodity to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto, as may be specified in the order;

(ii) for the grant or issue of licences, permits or other documents, the charging of fees therefor, the deposit of such sum, if any, as may be specified in the order as security for the due performance of the conditions of any such licence, permit or other document, the forfeiture of the sum so deposited or any part thereof for contravention of any such conditions, and the adjudication of such forfeiture by such authority as may specified in the order;

(j) for any incidental and supplementary matters, including in particular, the entry, search or examination of premises, aircraft, vessels, vehicles or other conveyances and animals, and the seizure by a person authorized to make such entry, search or examination, —

(i) of any articles in respect of which such person has reason to believe that a contravention of the order has been, is being, or is about to be committed and any packages, coverings or receptacles in which such articles are found;

(ii) of any aircraft, vessel, vehicle or other conveyance or animal used in carrying such articles, if such person has reason to believe that such aircraft, vessel, vehicle or other conveyance or animal is liable to be forfeited under the provisions of this Act;

(iii) of any books of accounts and documents which in the opinion of such person, may be useful for, or relevant to, any proceeding under this Act and the person from whose custody such books of accounts or documents are seized shall entitled to make copies thereof or to take extracts therefrom in the presence of an officer having the custody of such books of accounts or documents.

(3) Where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of sub-section (2), there shall be paid to him the price therefor as hereinafter provided, —

(a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price, calculated with reference to the controlled price, if any;

(c) where neither Clause (a) not Clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale.

(3-A)(i) If the Central Government is of opinion that it is necessary so to do for controlling the rise in prices, or preventing the hoarding of any foodstuff in any locality, it may, by notification in the Official Gazette, direct that notwithstanding anything contained in sub-section (3), the price at which the foodstuff shall be sold in the locality in compliance with an order made with reference to Clause (f) of sub-section (2) shall be regulated in accordance with the provisions of this sub-section.

(ii) Any notification issued under this sub-section shall remain in force for such period not exceeding three months as may be specified in the notification.

(iii) Where, after the issue of a notification under this sub-section any person sells foodstuff of the kind specified therein, and in the locality so specified, in compliance with an order made with reference to Clause (f) of sub-section (2), there shall be paid to the seller as the price therefor, —

(a) where the price can, consistently with the controlled price of the foodstuff, if any, fixed under this section, be agree upon, the agreed price,

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

(c) where neither Clause (a) nor Clause (b) applies, the price calculated with reference to the average market rate prevailing in the locality during the period of three months immediately preceding the date of the notification.

(iv) For the purposes of sub-section (c) of Clause (iii) the average market rate prevailing in the locality shall be determined by an officer authorised by the Central Government in this behalf, with reference to the prevailing market rates for which published figures are available in respect of that locality or of a neighbouring locality; and the the average market rate so determined shall be final and shall not be called in question in any court.

(3-B) Where any person is required, by an order made with reference to Clause (f) of sub-section (2), to sell to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government, any grade or variety or foodgrains, edible oil seeds or edible oils in relation to which no notification has been issued under sub-section (3-A), or such notification have been issued, has ceased to be in force, there shall be paid to the person concerned notwithstanding anything to the contrary contained sub-section (3), an amount equal to the procurement price of such foodgrains, edible oilseeds or edible oils, as the case may be specified by the State Government, with the previous approval of the Central Government having regard to, —

(a) the controlled price, if any, fixed under this section or by or under any other law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils;

(b) the general crop prospects;

(c) the need for making such grade or variety of foodgrains, edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable sections of the consumers; and

(d) the recommendations, if any, of the Agricultural Prices Commission with regard to the price of the concerned grade or variety of foodgrains, edible oilseeds or edible oils.

(3-C) Where any producer is required by an order made with reference to Clause (f) of sub-section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued, under sub-section (3-A) or any such notification, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in sub-section (3) there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to,—

(a) the minimum price, if any, fixed for sugarcane by the Central Government under this section;

(b) the manufacturing cost of sugar;

(c) the duty or tax, if any, paid or payable thereon; and

(d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar;

and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.

Explanation. For the purposes of this sub-section “producer” means a person carrying on the business of manufacturing sugar.

(4) If the Central Government is of opinion that it is necessary so to do for maintaining or increasing the production and supply of an essential commodity, it may, by order, authorise any person (hereinafter referred to as an authorised controller) to exercise, with respect to the whole or any part of such undertaking engaged in the production and supply of the commodity as may be specified in the order, such functions of control as may be provided therein and so long as such order is in force with respect to any undertaking or part thereof, —

(a) the authorised controller shall exercise his functions in  accordance with any instructions given to him by the Central Government, so, however, that he shall not have any power to give any direction inconsistent with the provisions of any enactment or any instrument determining the functions of the persons in charge of the management of the undertaking except in so far as may be specifically provided by the order; and

(b) the undertaking or part shall be carried on in accordance with any directions given by the authorised controller under the provisions of the order, and any person having any functions of management in relation to the undertaking or part shall comply with any such directions.

[Sub-sections (4-A), (4-B) and (4-C) to Section 3 inserted by Act 14 of 1967 Section 2 ceased to have effect from 31-3-1968.] Repealed by Act 56 of 1974, Section 2 and Schedule I.

(5) An order made under this section shall, —

(a) in the case of an order of a general nature or affecting a class of persons, be notified in the Official Gazette; and

(b) in the case of an order directed to a specified individual be served on such individual, —

(i) by delivering or tendering it to that individual; or

(ii) if it cannot be so delivered or tendered, by affixing it the outer door or some other conspicuous part of the premises in which that individual lives, and a written report thereof shall be prepared and witnessed by two persons living in the neighbourhood.

(6) Every order made under this section by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made.

STATE AMENDMENTS

Bihar:

In Section 3 of the Act —

(a)  in sub-section (2), for clause (f), the following clause shall be and shall be deemed always to have been substituted, namely:  “(f) for requiring any person holding in stock, or engaged in the manufacture or production of, or in the business of buying or selling, any essential commodity to sell the whole or a specified part of the quantity held in stock or manufactured or produced or caused to be produced by him or received or likely to be received by him in the course of the said business, to the Central Government or a State Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Explanation. — An order relating to foodgrains made with reference to this clause —

(i)  may specify the prices, fixed by the Central/State Government in this behalf after taking into account the recommendation, if any, of the Agricultural Prices Commission and with the prior concurrence of the Central Government as the amount which shall be paid for the foodgrains required to be sold under the order;

(ii)  may fix or provide for the fixation of the quantity to be sold by a producer with reference to the area under cultivation and the availability of irrigation for production of the particular foodgrain to which the order relates and also fix or provide for the fixation of such quantities or a graded basis having regard to the aggregate area held by or under the cultivation of different producers”;

(b)  in sub-section (3), for clause (c), the following clauses shall be and shall be deemed always to have been substituted, namely:

(c)  in case of foodgrains, where neither clause (a) nor clause (b) allies, the price, if any, specified in the said order;

(d)  where neither clause (a), nor clause (b), nor clause (c0 applies, the price calculated at the market rate prevailing in the locality at the date of sale”;

(e)  in sub-section (3-B), after clause (a), the following clause shall be and shall be deemed always to have been inserted, namely:

(aa)  in the case of foodgrains, where no controlled price is fixed by an order made with reference to clause (c) of sub-section (2), the amount specified in the said order made with reference to clause (f) of sub-section (2) for such grade or variety of foodgrains; or        [Bihar Act IX of 1978].

Maharashtra:

In Section 3 of the principal Act, —

(i)  in sub-section (2), for clause (f), the following clause shall be substituted and shall be deemed always to have been substituted, namely:

(f)  for requiring any person holding in stock, or likely to hold in stock or, engaged in the manufacture or production or processing of, in the business of or buying or selling, any essential commodity to sell, the whole or a specified part of the quantity or the essential commodity held in stock or likely to be held in stock by him or manufactured or produced or processed or likely to be manufactured or produced or processed by him or received or likely to be received by him in his business of buying or selling to the Central Government or the State Government or to an officer or agent of any Government or to such other person or class of persons and in such circumstances as may be specified in the order.  Explanation. — An order made under this clause in respect of foodgrains may fix or provide for fixation of the quantity to be sold by a producer with reference to the nature and extent of his holding or the land revenue payable by him with certain weightages which may be prescribed for certain crops or lands enjoying irrigation or other facilities and also fix or provide for fixation of the quantity to be sold on a graded basis having regard to the size of the holdings of different producers.”

(ii)  in sub-section (3), for clause (c), the following clause shall be substituted, and shall be deemed always to have been substituted, namely:  “(c) where neither clause (a) nor clause (b) applies, in the case of foodgrains, the amount, if any, specified in or calculated in accordance with the order made under clause (f) of sub-section (2) read with sub-section (3-B), and in the case of any other essential commodity, the price calculated at the market rate prevailing in the locality at the date of sale.”

(iii)  for sub-section (3-B), the following sub-section shall be substituted, and shall be deemed always  to have been substituted, namely:  “(3-B) Where, by an order made with reference to clause (f) of sub-section (2), any person is required to sell any grade or variety of foodgrains, edible oilseeds or edible oils to the Central Government or a State Government or an officer or agent of such Government or a Corporation owned or controlled by such Government or to a person or class of persons specified in the order, and either no notification in respect of such foodgrains, edible oilseeds or edible oils has been issued under sub-section (3-A), or any such notification having been issued, has ceased to remain in force by efflux of time then, notwithstanding anything contained in sub-section (3), there shall be paid to the person concerned an amount determined by the Central Government or the State Government, as the case may be,

(a)  having regard to the controlled price, if any, fixed under this section or by or under any law for the time being in force for such grade or variety of foodgrains, edible oilseeds or edible oils, or

(b)  having regard to the prices recommended by the Agricultural Prices Commission for the concerned essential commodity, where no controlled price in relation to such commodity, has been fixed by or under any law for the time being in force.”            [Mah. Act 1 of 1976].

Orissa:

In Section 3 of the Act, —

(i)  in sub-section (2), for clause (f), the following clause shall be and shall be deemed always to have been substituted, namely:

(f)  for requiring any person holding in stock or engaged in the manufacture or production of, or in the business of buying or selling any essential commodity to sell the whole or a specified part of the quantity held in stock or manufactured or produced or caused to be produced, manufactured or produced by him or received or likely to be received by him in the course of the said business, to the Central Government or a State Government or to an officer or agent to such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Explanation. —An order relating to foodgrains made with reference to this clause

(i)  may specify the prices, fixed by the State Government in this behalf, after taking into account the recommendations, if any, of the Agricultural Prices Commission and with the prior concurrence of the Central Government, as the amount which shall be paid for the foodgrain required to be sold under the order;

(ii)  may fix or provide for the fixation of the quantity to be sold by a producer with reference to the area under cultivation and the availability of irrigation for production of the particular foodgrain to which the order relates, and also, fix or provide for the fixation of such quantities on a graded basis having regard to the aggregate area held by or under the cultivation of the different producers.”

(ii)  in sub-section (3), for clause (c) the following clauses shall be and shall be deemed always to have been substituted, namely:

(c)  in the case of foodgrains, where neither clause (a), nor clause (b) applies, the price, if any, specified in the said order:

(d)  where neither clause (a), nor clause (b), nor clause (c) applies, the price calculated at the market rate prevailing in the locality at the date of sale.”

(iii)  in sub-section (3-B) after clause (i), the following clause shall be inserted and shall be deemed always to have been inserted, namely:  “(i-a) in the case of foodgrains where no controlled price is fixed by an order made with reference to clause (c) of sub-section (2), the amount specified in the said order made with reference to clause (f) of sub-section (2) for such grade or variety of foodgrains; or           [Orissa Act 8 of 1976].

Uttar Pradesh:

In sub-section (2) in clause (f), after Explanation 1, the following Explanation shall be inserted, namely:

“Explanation 1-A. — An order made under this clause in relation to rice may, having regard to the milling capacity of a rice mill, fix the quantity to be sold by the licensed miller and may also fix or provide for the fixation of such quantity on a graded basis.”

[U.P. Act 16 of 1978]

In sub-section (2), after clause (f), the following clause shall be inserted, namely:

“(ff) for preventing the hoarding of any essential commodities”.    [U.P. Act No. 9 of 1974].

In sub-section (3), for clause (c), the following clause shall be substituted and be deemed always to have been substituted, namely:

“(c)  in the case of foodgrains, where neither clause (a) nor clause (b) applies, the amount, if any, specified in the said order made with reference to clause (f) of sub-section (2);

(d)  where neither clause (a), nor clause (b), nor clause (c) applies the price calculated, at the market rate prevailing in the locality at the date of sale.”      [U.P. Act 18 of 1975].

Comments

Prosecution duty bound to establish knowledge on the part of the accused, and by  his  merely being a driver, by establishing that the fuel tank did contain kerosene, such knowledge could not be established. Abdul Jabbar v. State of Maharashtra. 1995 Cri.L.J. 3446, (Bom.)

Sale of adulterated cement — Damaged stoned cement not cement — Proceedings quashed. Sri Mahadev Ch. Mazumder v. State of West Bengal and others. 1994 Cri.L.J. 3808 (Calcutta)

Black Marketing — Breach of distribution and control order regarding  sugar received under licence — Accused liable for punishment. State of Madhya Pradesh v. Chahaganlal s/o. Ramlal Dholi. 1993  Cri.L.J. 1495 (M.P)

Formulation — Includes even one bulk drug where that one bulk drug by itself is treated as a medicine. Balakrishna Pillai and another, v. M/s.  Matha Medicals and others. 1991 Cri.L.J. 448 = 1991(1) JT 123 = 1991(1) Rec Cri R 263 = 1991 SCC (Cri) 461 = AIR SCW 1991 SC 349 (S.C)

Food grains sold in anticipation of licence — Absence of any  intentional contravention of Section 7 — Conviction set aside. Shiker Chand v. State of Rajasthan, 1994 Cri.L.J 760 = 1994(2) Rec Cri R 337 = 1994 (2) CCJ 207 (Raj.)

4. Imposition of duties on State Government, etc . — An order made under Section 3 may confer powers and impose duties upon the Central Government or the State Government or officers and authorities of Central Government or the State Government, and may contain directions to any State Government or to officers and  authorities thereof as to the exercise of any such powers or the discharge of any such duties.

5. Delegation of powers — The Central Government may, by notified order, direct that the power to make orders or issue notifications under Section 3 shall, in relation to such matters and subject to such conditions if any, as may be specified in the direction, be exercisable also by, —

(a) such officer or authority subordinate to the Central Government; or

(b) such Government or such officer or authority subordinate to a State Government,

as may be specified in the direction.

6. Effect of orders in consistent with other enactments . — Any order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act.

6-A. Confiscation of essential commodity . — (1) Where any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, a report of such seizure shall, without unreasonable delay be made to the Collector of the district or the Presidency town in which such essential commodity is seized and whether or not a prosecution is instituted for the contravention of such order, the Collector may, if he thinks it expedient so to do, direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the order confiscation of, —

(a) the essential commodity so seized;

(b) any package, covering or receptacle in which such essential commodity is found; and

(c) any animal, vehicle, vessel or other conveyance used in carrying such essential commodity:

Provided that without prejudice to any action which may be taken under any other provision of this Act, no foodgrains or edible oilseeds seized in pursuance of an order made under Section 3 in relation thereto from a producer shall, if the seized foodgrains or edible oilseeds have been produced by him, be confiscated under this Section :

Provided further that in the case of any animal, vehicle, vessel or other conveyance used for the carriage of goods or passengers for hire, the owner of such animal, vehicle, vessel or other conveyance shall be given an option to pay, in lieu of its confiscation, a fine not exceeding the market price at the date of seizure of the essential commodity sought to be carried by such animal, vehicle, vessel or other conveyance.

(2) Where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub-section (1), is of the opinion that the essential commodity is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do, he may, —

(i) order the same to be sold at the controlled price, if any, fixed for such essential commodity under this Act or under any other law for the time being in force; or

(ii) where no such price is fixed, order the same to be sold by public auction :

[4] [Provided that in the case of any such essential commodity the retail sale price whereof has been fixed by the Central Government or a State Government under this Act or under any other law for the time being in force, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price so fixed.]

(3) Where any essential commodity is sold, as aforesaid, the sale proceeds thereof, after deduction of the expenses of any such sale or auction or other incidental expenses relating thereto, shall, —

(a) where no order of confiscation is ultimately passed by the Collector,

(b) where an order passed on appeal under sub-section (1) of Section 6-C so requires, or

(c) where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under this section, the person concerned is acquitted,

be paid to the owner thereof or the person from whom it is seized.

STATE AMENDMENTS

Bihar:

For Section 6-A, the following section shall be substituted, namely:

“6-A. Confiscation of foodgrains, edible oilseeds, edible oils, etc. — (1) Where any essential commodity is seized in pursuane of an order made under Section 5 in relation thereto it shall be reported without any unreasonable delay to the Collector of the District in which such essential commodity is seized and the Collector may, if he thinks it expedient so to do, inspect or cause to be inspected such essential commodity whether or not the prosecution is instituted for the contravention of such order and the Collector, if satisfied that there has been a contravention of the order, may order confiscation of —

(a)  the essential commodities so seized;

(b)  any package; covering or receptacle in which such essential commodity is found; and

(c)  any animal, vehicle, vessel, or other conveyance used in carrying such essential commodity;

Provided that, without prejudice to any action which may be taken under any other provision of this Act, no foodgrains or edible oilseeds seized in pursuance of an order made under Section 3 in relation thereto from producer shall, if the seized foodgrains or edible oil seeds have been produced by him, be confiscated under this section.

(2) Where the Collector, or receiving a report of seizure or in inspection of any essential commodity under sub-section (1) is of the opinion that such essential commodity is subject to speedy and natural decay or that it is otherwise expedient in the public interest so to do, he may order the same to be sold at the controlled price, if any, fixed under any law for the time being in force.

(3) In he case of foodgrains, where there is no controlled price the Collector if he thinks fit, may order the foodgrains seized under sub-section (1) to be sold through fair price shops at the price fixed by Central Government or the State Government, as the case may be, for the sale of such foodgrains to the public through these shops or may order such foodgrains to be sold by public auction.

(4) The Collector shall, whenever it is practicable so to do, having regard to the nature of the essential commodity, take and reserve sample of the same in the prescribed manner before its sale or distribution.

(5) Where any essential commodity is sold as aforesaid the sale-proceeds thereof, after deduction of all expenses of the sale or auction, as the case may be, shall —

(a)  where no order of confiscation ultimately passed by the Collector; or

(b)  where an order passed on appeal under sub-clause (1) of Section 6-C so requires; or

(c)  in the case of prosecution of the order in respect of which an order of confiscation has been made under this section and where the person concerned is acquitted be paid to the owner thereof or the person from whom it is seized:

Provided that in the case of foodgrains sold through fair price shops in accordance with sub-sections (2) and (3) the owner shall be paid for the foodgrains so sold, the price fixed by the State Government, for retail sale of such foodgrains through such shops less all expenses of sale or auction under sub-sections (2) and (3).

(6) Notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (Act 2 of 1974) when the Collector or the appellate authority is seized with the matter under this section no court shall entertain any application in respect of essential commodities, any package, covering, receptacle, any animal, vehicle or other conveyance used in carrying such commodities as far as its release, distribution, etc. is concerned and the jurisdiction of Collector or the appellate authority with regard to the disposal of the same shall be exclusive.

(7) The State Government may, by notification in the official Gazette, authorise any officer not below the rank of Sub-Divisional Magistrate, to discharge all or any of the functions of a Collector under this section.

(8) The Collector shall for the purpose of this Act have the same powers as are vested in a court under the Code of Civil Procedure, 1908 when making enquiries under this section in respect of the following matters, namely, —

(a)  receiving evidence on affidavits;

(b)  summoning and enforcing the attendance of any person and examining him on oath; and

(c)  compelling the production of documents.

(9) All enquiries and proceedings under this section before the Collector and the appellate authority shall be deemed to be judicial proceedings and while discharging functions under this section the Collector and the appellate authority shall be deemed to be a court.

[Bihar Act IX of 1978]

Maharashtra:

For Section 6-A of the principal Act, the following section shall be substituted, namely:

6-A. Confiscation of seized commodities. — (1) Where any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto a report to that effect shall, without any unreasonable delay, be sent to the Collector within whose jurisdiction the seizure is made, and the Collector may, if he thinks it expedient so to do, inspect or cause to be inspected such essential commodity, and whether or not a prosecution is instituted for the contravention of such order, the Collector, if satisfied that there has been contravention of the order, may order confiscation of —

(a)  the essential commodity so seized;

(b)  any package, covering or receptacle in which such essential commodity is found; and

(c)  any animal, vehicle, vessel or other conveyance used in carrying such essential commodity:

Provided that, without prejudice to any action that may be taken under any other provision of this Act, no foodgrains or edible oilseeds seized in pursuance of an order made under Section 3 in relation thereto from producer shall, if the seized foodgrains or edible oilseeds have been produced by him, be confiscated under this section:

Provided further that, where any animal, vehicle, vessel or other conveyance is used for the carriage of goods or passengers for hire, the owner of such animal, vehicle, vessel or other conveyance shall be given an option to pay in lieu of its confiscation a fine not exceeding the market price at the date of seizure of the essential commodity to be carried.

(2) Where the Collector on receiving a report of seizure or on inspection of any essential commodity under sub-section (1) is of the opinion that such essential commodity is subject to speedy and natural decay or that it is otherwise expedient in the public interest so to do, he may order the same to be sold at the controlled price, if any, fixed under any law for the time being in force, or where no such price is fixed, by auction:

Provided that, in the case of foodgrains where there is no controlled price, the Controller may order the foodgrains seized to be sold through fair price shops at the price fixed by the Central Government or the State Government, as the case may be, for the sale of such foodgrains to the public through these shops:

Provided further that, whenever it is practicable so to do, having regard to the nature of the essential commodity, he shall take and preserve sample of the same before its sale or auction.

(3) Where any essential commodity is sold as aforesaid, the sale proceeds thereof, after deduction of the expenses of the sale or auction, as the case may be, shall —

(a)  where no order of confiscation is ultimately passed by the Collector; or

(b)  where an order passed on appeal under sub-clause (1) of Section 6-C so requires; or

(c)  in the case of a prosecution being instituted for the contravention of the order in respect of which an order of confiscation has been made under this section, where the person concerned is acquitted be paid to the owner thereof or the person from whom it is seized:

Provided that, in the case of foodgrains sold through fair price shops is accordance with the first proviso to sub-section (2), the owner shall be paid for the foodgrains so sold the price fixed by the State Government, for retail sale of such foodgrains through such shops, less all expenses of sale or auction under sub-section (2).

[Maharasthra Act 1 of 1976].

Uttar Pradesh:

For Section 6-A of the principal Act, the following section shall be substituted, namely:

“6-A. (1) Where any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto a report to this effect shall, without any unreasonable delay, be sent to the Collector of the District in which the seizure is made, and the Collector may, if he thinks it expedient so to do, inspect or cause to be inspected such essential commodity and whether or not a prosecution is instituted for the contravention of such order, the Collector, if satisfied that there has been contravention of the order, may order confiscation of —

(a)  the essential commodity so seized;

(b)  any package, covering or receptacle in which such essential commodity is found; and

(c)  any animal, vehicle, vessel or other conveyance used in carrying such essential commodity;

Provided that, without prejudice to any action that may be taken under any other provision of this Act, no foodgrains or edible oilseeds seized in pursuance of an order made under Section 3 in relation thereto from a producer shall, if the seized foodgrains or edible oilseeds have been produced by him, be confiscated under this section:

Provided further that where any animal, vehicle, vessel or other conveyance is used for the carriage of goods or passengers for hire, the owner of such animal, vehicle, vessel or other conveyance shall be given an option to pay in lieu of its confiscation a fine not exceeding the market price at the date of seizure of the essential commodity sought to be carried.

(2) Where the Collector on receiving a report or on inspection of any essential commodity under sub-section (1) is of the opinion that such essential commodity is subject to speedy and natural decay or that it is otherwise expedient in the public interest so to do, he may order the same to be sold at the controlled price, if any, fixed under any law for the time being in force, or where no such price is fixed, by auction:

Provided that, in the case of foodgrains, where there is no controlled price, the Collector may order the foodgrains seized to be sold through fair price shops at the price fixed by the Central Government or the State Government, as the case may be, for the sale of such foodgrains to the public through these shops:

Provided also that whenever it is practicable so to do having regard to the nature of the essential commodity he shall take and preserve sample of the same before its sale or auction.

(3) Where any essential commodity is sold as aforesaid, the sale-proceeds, thereof after deduction of the expenses of the sale or auction, as the case may be, shall —

(a)  where no order of confiscation is ultimately passed by the Collector; or

(b)  where an order passed on appeal under sub-clause (1) of Section 6-C so requires; or

(c)  in the case of a prosecution being instituted for the contravention of the order in respect of which an order of confiscation has been made under this section, where the person concerned is acquitted, be paid to the owner thereof or the person from whom it is seized:

Provided that in the case of foodgrains sold through fair price shops in accordance with the first proviso to sub-section (2) the owner shall be paid for the foodgrains so sold the price fixed by the State Government, for retail sale of such foodgrains through such shops less all expenses of sale or auction under sub-section (2)”

[U.P. Act 18 of 1975].

6-B. Issue of show-cause notice before confiscation of essential commodity. —  (1) No order confiscating any essential, package, covering, receptacle, animal, vehicle, vessel or other conveyances shall be made under Section 6-A unless the owner of such essential commodity, package, covering, receptacle, animal, vehicle, vessel or other conveyance or the person from whom it is seized, —

(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the essential commodity, package, covering, receptacle, animal, vehicle, vessel or other conveyance;

(b) is given an opportunity of making a representation is writing such reasonable time as may be specified in the notice against the grounds of confiscation; an

(c) is given a reasonable opportunity of being heard in the matter.

(2) Without prejudice to the provisions of sub-section  (1), no order confiscating any animal, vehicle, vessel or other conveyance shall be made under Section 6-A if the owner of the animal, vehicle, vessel or other conveyance proves to the satisfaction of the Collector that it was used in carrying the essential commodity without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the animal, vehicle, vessel or other conveyance and that each of them had taken all reasonable and necessary precautions against such use.

(3) No order of confiscating any essential commodity, package, covering, receptacle, animal, vehicle, vessel or other conveyance shall be invalid merely by reason of any defect or irregularity in the notice given under clause (a) of sub-section (1), if, in giving such notice, the provisions of that clause have been substantially complied with.

STATE AMENDMENTS

Uttar Pradesh:

After Section 6-B, insert Section 6-BB, namely:

“6-BB. Review. — (1) Where the Controller is satisfied that an order of confiscation or an order refusing confiscation made under Section 6-A suffers from a mistake apparent on the face of the record (including any mistake of law), he may within one months of such order issue notice to the record (including any mistake of law), he may within one month of such order issue notice to the owner of the essential commodity, package, covering receptacle, animal, vehicle, vessel or other conveyance, or, as the case may be, the person from whom it was seized, to show cause why that order should not be reviewed, and after giving him a reasonable opportunity of being heard, pass such order or review as he thinks fit.

(2) The provisions of Section 6-C and 6-D shall apply in relation to an order passed on such review as they apply in relation to an order passed originally under Section 6-A.

[U.P. Act 18 of 1975]

6-C. Appeal. — (1) Any person aggrieved by an order of confiscation under Section 6-A may, within one month from the date of the communication to him of such order, appeal to [5][the State Government concerned and the State Government shall], after giving an opportunity to the appellant to be heard, pass such order as it may think fit, confirming, modifying or annulling the order appealed against.

(2) Where an order under Section 6-A is modified or annulled by [6][the State Government] or where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been under Section 6-A, the person concerned is acquitted, and in either case it is not possible for any reason to return the essential commodities seized, such person shall, except as provided by sub-section (3) of Section 6-A be paid the price therefor, as if the essential commodity has been sold to the Government with reasonable interest calculated from the day of the seizure of the essential commodity and such price shall be determined, —

(i) in the case foodgrains, edible oilseeds or edible oils, in accordance with the provisions of sub-section (3-B) of Section 3.

(ii) in the case of sugar, in accordance with the provisions of sub-section (3-C) of Section 3; and

(iii) in the case of any other essential commodity, in accordance with the provisions of sub-section (3) of Section 3.

STATE AMENDMENT

Bihar:

For Section 6-C of the said Act, the following section shall be substituted:

6-C. Appeal. — (1) Any person aggrieved by an order of confiscation under Section 6-A may, within one months from the date of communication to him of such order, appeal to any judicial authority appointed by the State Government concerned and the judicial authority shall, after giving an opportunity to the appellant to be heard, pass such order as it may think fit, confirming, modifying or annulling the order appealed against.

(2) Where an order under Section 6-A is modified or annulled by such judicial authority, or where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under Section 6-A, the person concerned is acquitted, and in either case it is not possible for any reason to return the essential commodity seized, such person shall, save as provided by sub-section
(3) of Section 6-A, be paid the price therefor as if the essential commodity had been sold to the Government with reasonable interest calculated from the date of seizure and such price shall be determined —

(i)  in the case of foodgrains, edible oilseeds or edible oils, in accordance with the provision of sub-section (3-B) of Section 3;

(ii)  in the case of sugar, in accordance with the provisions of sub-section (3-C) of Section 3; and

(iii)  in the case of any other essential commodity, in accordance with the provisions of sub-section (3) of Section 3.                          [Bihar Act IX of 1978]

6-D. Award of confiscation not to interfere with other punishments. — The award of any confiscation under this Act by the Collector shall not prevent the infliction of any punishment to which the person affected thereby is liable under this Act.

[7] [6-E. Bar of jurisdiction in certain cases. — Whenever any essential commodity is seized in pursuance of an order made under Section 3 in relation thereto, or any package, covering or receptacle in which such essential commodity is found, or any animal, vehicle, vessel or other conveyance used in carrying such essential commodity is seized pending confiscation under Section 6-A, the Collector, or, as the case may be, the State Government concerned under Section 6-C shall have, and, notwithstanding anything to the contrary contained in any other law for the time being in force, any court, tribunal or other authority shall not have jurisdiction to make orders with regard to the possession, delivery, disposal, release or distribution of such essential commodity, package, covering receptacle, animal, vehicle, vessel or other conveyance.]

7. Penalties. — (1) If any person contravenes any orders made under Section 3, —

(a) he shall be punishable, —

(i) in the case of an order made with reference to Clause (h) or Clause (i) of sub-section (2) of that section, with imprisonment for a term which may extend to one year and shall also be liable to fine, and

(ii) in the case of any other order, with imprisonment for a term which shall not be less than three months but which may extend to seven years and shall also be liable to fine;

[8] [ *  *  *  * ]

(b) any property in respect of which the order has been contravened shall be forfeited to the Government.

(c) any package, covering or receptacle in which the property is found and any animal, vehicle, vessel or other conveyance used in carrying the property shall, if the court so orders, be forfeited to the Government.

(2) If any person to whom a direction is given under Clause (b) of sub-section (4) of Section 3 fails to comply with the direction, he shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to seven years and shall also be liable to fine.]

[9] [ *  *  * ]

(3) Where a person having been convicted of an offence under sub-section (1) is again convicted of an offence under that sub-section for contravention of an order in respect of an essential commodity, the court by which such person is convicted shall, in addition to any penalty which may be imposed on him under that sub-section, by order, direct that person shall not carry on any business in that essential commodity for such period, not being less than six months as may be specified by Court in the order.

Comments

Quashing of F.I.R. — Cannot be ordered on the ground that sample was not taken properly. Sarup Chand and others v. State of Punjab. 1995 Cri.L.J. 1601. (P&H)

Pending prosecution is not invalidated on the expiry  of control order which was for specific duration. Isher Das v. State of Haryana 1992 Cri.L.J. 2327 = AIR 1992 SC 1595 = 1992(2) Recent CR 337 = 1992 AIR SCW 1734 (SC)

Wheat export — Provisions punish attempt to export and not its preparation. Joginder Singh v. State of Punjab. 1994 Cri.L.J. 126 = 1992(3) All Cri. LR 585 =1992(19) Cri.LT 392 = 1994(1) ILR (P&H) 283 (P&H)

Special Court is competent to pass  orders under sub-section (5) of Section 167, Cr.P.C. in the case under Section 7(1)(a)(ii) of the Act which is triable by him in a summary way. Phalguni Datta v. State of West Bengal. 1991 Cri.L.J. 565 = 1990 Cal Cri LR 225 = 1990(2) Cal HN 154 (Calcutta)

[10] [7-A. Power of Central Government to recover certain amounts as arrears of land revenue. —(1) Where any person liable to, —

(a) pay any amount in pursuance of any order made under Section 3, or

(b) deposit any amount to the credit of any Account or Fund constituted by or in pursuance of any order made under that section,

makes any default in paying or depositing the whole or any part of such amount, the amount in respect of which such default has been made shall, [whether such order was made before or after the commencement of the Essential Commodities (Amendment) Act, 1984, and whether the liability of such person to pay or deposit such amount arose before or after such commencement] be recoverable by Government together with simple interest due thereon computed at the rate of [11][fifteen per cent] per annum, from the date of such default to the date of recovery of such amount, as an arrear of land revenue [12][or as a public demand].

(2) The amount recovered under sub-section (1) shall be dealt with in accordance with the order under which the liability to pay or deposit such amount arose.

(3) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, no court, tribunal or other authority shall grant any injunction or make any order prohibiting or restraining any Government from recovering any amount as an arrear of land revenue [13][or as a public demand] in pursuance of the provisions of sub-section (1).

(4) If any order, in pursuance of which any amount has been recovered by Government as an arrear of land revenue [14] [or as a public demand] under sub-section (1) is declared by a competent court, after giving to the Government a reasonable opportunity of being heard, to be invalid, the Government shall refund the amount so recovered by it to the person from whom it was recovered, together with simple interest due thereon, computed at the rate of [15][fifteen per cent] per annum from the date of recovery of such amount to the date on which such refund is made.

which the concerned order Section 3 was made or where such order was made by an officer or authority subordinate to any Government, that Government.]

8. Attempts and abetment. — Any person who attempts to contravene, or abets a contravention of any order made under Section 3 shall be deemed to have contravened that order:

[16] [Provided that where a person has abetted the contravention of any order for the purpose of procuring any essential commodity of the nature mentioned in sub-section (iv-a) or sub-clause (v) of Clause (a) of Section 2 for his own use or for the use of any member of his family or for the use of any person dependent on him, and not for the purpose of carrying on any business or trade in such essential commodity, the court may, notwithstanding anything contained in Section 7 and for reasons to be mentioned in the judgment, impose a sentence of fine only.]

9. False statements. — If any person, —

(i) when required by an order made under Section 3 to make any statement or furnish any information, makes any statement or furnishes any information which is false in any material particular and which he knows or has reasonable cause to believe to be false, or does not believe to be true, or

(ii) makes any such statement as aforesaid in any book, account, record, declaration, return or other document which he is required by any such order to maintain or furnish,

he shall be punishable with imprisonment for a term which may extend to five years, or with fine, or with both.

10. Offences by companies. — (1) If the person contravening an order made under Section 3 is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation. For the purposes of this Section, —

(a) “company” means any body corporate, and includes a firm or other association of individuals, and

(b) “director” in relation to a firm means a partner in the firm.

Comments

Prosecution — Officer of Company cannot be prosecuted in the absence of Company being impleaded. Sham Sunder Bassi v. State of Punjab. 1992 Cri.L.J. 1199 = 1991(3) Recent CR 1199 (P&H)

10-A. Offences to be cognizable [17] [and non-bailable]. — Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) every offence punishable under this Act shall be cognizable

Comments

Offences under the Act — Are cognizable and non-bailable. State of Rajasthan v. Prakash Chandra and others. 1995 Cri.L.J. 2295.(Raj)

[18] [10-AA. Power to arrest. — Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no officer below the rank of an officer-in-charge of a police station or any police officer authorised by him in this behalf in writing shall arrest any person accused of committing an offence punishable under this Act.]

10-B. Power of court to punish name, place of business etc. of companies convicted under the Act. — Where any company is convicted under this Act, it shall be competent for the court convicting the company to cause the name and the place of business of the company, nature of the contravention, the fact that the company has been so convicted and such other particulars as the court may consider to be appropriate in the circumstances of the case, to be published at the expense of the company in such newspapers or in such other manner as the court may direct.

(2) No publication under sub-section (1) shall be made until the period for preferring an appeal against the orders of the court has expired without any appeal having been preferred, or such an appeal, having been preferred, has been disposed of.

(3) The expenses of any publication under sub-section (1) shall be recoverable from the company as if it were a fine imposed by the court.

ExplanationFor the purposes of this section, “company“ has the meaning assigned to it in Clause (a) of the Explanation to Section 10.

10-C. Presumption of culpable mental state. — (1) In any prosecution for any offence under this Act which requires is culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

Explanation In this section “culpable mental state“ includes intention, motive, knowledge of a fact and the belief in, or reason to believe, a fact.

(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.

11. Cognizance of offences. — No court shall take cognizance of any offence punishable under this Act except on a report in writing of the facts constituting such offence made by a person who is a public servant as defined in Section 21 of the Indian Penal Code (45 of 1860) [19][or any person aggrieved or any recognised consumer association, whether such person is a member of that association or not.]

[20] [Explanation For the purposes of this section and Section 12-AA, “recognised consumer association” means a voluntary consumer association registered under the  Companies Act, 1956 (1 of 1956) or under any other law for the time being in force.]

STATE AMENDMENT

Uttar Pradesh

In Section 11, for the words “by person who is a public servant as defined in Section 21 of the Indian Penal Code”, the words “by order of or under authority from the District Magistrate or such other officer as may be empowered by the State Government by general or special order in this behalf” shall be substituted.

[U.P. Act 9 of 1974]

12. Special provisions regarding fine. — [21] [ * * * ]

[22] [12-A. Constitution of Special Courts. — (1) The State Government may, for the purpose of providing speedy trial of the offences under this Act, by notification in the official Gazette, constitute as many Special Courts as may by necessary for such area or as may be specified in the notification.

(2) A Special Court shall consist of a single Judge who shall be appointed by the High Court upon a request made by the State Government.

Explanation. —In this sub-section, the word, “appoint” shall have the meaning given to it in the Explanation to Section 9 of the Code.

(3) A person shall not be qualified for appointment as a Judge of a Special Court unless —

(a) he is qualified for appointment as a Judge of a High Court, or

(b) he has, for a period of not less than one year, been a Sessions Judge or an Additional Sessions Judge.

Comments

Special Court — Special Court constituted under the Act is empowered to take cognizance on police report submitted before it without the accused being committed must be regarded as Criminal Court of original jurisdiction clothed with all the powers exercisable by such a Court unless expressly excluded — Can very well direct further investigation by Police under Section 156(3), Criminal Procedure Code. Mahesh Kumar Jindal and others v. State. 1993 Cri.L.J. 3861 (Cal.)

[23] [12- AA. Offences triable by Special Courts . — (1) Notwithstanding anything contained in the Code,

(a) all offences under this Act shall be triable only by the Special Court constituted for the area in which the offence has been committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court;

(b) where a person accused of or suspected of the commission of an offence under this Act is forwarded to a Magistrate under sub-section (2) or sub-section (2-A) of Section 167 of the Code, such Magistrate may authorise the detention of such person in such custody as he thinks fit for a period not exceeding fifteen days in the whole where such Magistrate is a Judicial Magistrate and seven days in the whole where such Magistrate in an Executive Magistrate:

Provided that where such Magistrate considers —

(i) when such person is forwarded to him as aforesaid;

(ii) upon or at any time before the expiry of the period of detention authorised by him;

that the detention of such person is unnecessary, he may, if he is satisfied that the case falls under the proviso to Section 8, order the release of such person on bail and if he is not so satisfied, he shall order such person to be forwarded to the Special Court having jurisdiction;

(c) the Special Court may, subject to the provisions of Clause (b) of this sub-section, exercise, in relation to the person forwarded to it under clause (b), the same power which a Magistrate having jurisdiction to try a case may exercise under Section 167 of the Code in relation to an accused person in such case who has been forwarded to him under that section;

(d) save as aforesaid no person accused of or suspected of the commission of an offence under this Act shall be released on bail by any court other than a Special Court or the High Court :

Provided that a Special Court shall not release any such person on bail —

(i) without giving the prosecution an opportunity to oppose the application for such release unless the Special Court, for reasons to be recorded in writing, is of opinion that it is not practicable to give such opportunity; and

(ii) where the prosecution opposes the application, if the Special Court is satisfied that there appear reasonable grounds for believing that he has been guilty of the offence concerned :

Provided further that the Special Court may direct any such person may be released on bail if he is under the age of sixteen years or is a woman or is a sick or infirm person, or if the Special Court is satisfied that it is just and proper so to do for any other special reason to be recorded in writing;

(e) a Special Court may, upon a perusal of police report of the facts constituting an offence under this Act [24][or upon a complaint made by an Officer of the Central Government or a State Government authorised in this behalf by the Government concerned] [25][or any person aggrieved or any recognised consumer association, whether such person is a member of that association or not,], take cognizance of that offence without the accused being committed to it for trial;

(f) all offences under this Act shall be tried in a summary way and the provisions of Sections 262 to 265 (both inclusive) of the Code shall, as far as may be, apply to such trial;

Provided that in the case of any conviction in a summary trial under this section, it shall be lawful for the Special Court to pass a sentence of imprisonment for a term not exceeding two years.

(2) When trying an offence under this Act, a Special Court may also try an offence other than an offence under this Act, with which the accused may, under the Code, be charged at the same trial :

Provided that such other offence is, under any other law for the time being in force, triable in a summary  way :

Provided further that in the case of any conviction for such other offence in such trial, it shall not be lawful for the Special Court to pass a sentence of imprisonment for a term exceeding the term provided for conviction in a summary trial under other law.

(3) A Special Court may, with a view to obtaining the evidence of any person suspected to have been directly or indirecly concerned in, or privy to, an offence under this Act, tender a pardon to such person on condition of his making a full and true disclosure of the whole circumstances within his knowledge relating to the offence and to every other person concerned whether as principal or abettor in the commission thereof and any pardon so tendered shall, for the purposes of Section 308 of the Code, be deemed to have been tendered under Section 307 thereof.

(4) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under Section 439 of the Code and the High Court, may exercise such powers including the power under Clause (b) of sub-section (1) of that section as if the reference to “Magistrate” in that section included also a reference to a “Special Court” constituted; under Section 12-A].

Comments

Charges framed — After framing of charges proceedings cannot be dropped — Court has either to acquit or convict the accused. Kisan Seva Sahakari Samiti Ltd. v. Bachan Singh. 1993 Cri.L.J. 2540(All).

12-AB. Appeal and revision. — The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of Sessions trying cases within the local limits of the jurisdiction of the High Court.

12-AC. Application of Code to proceedings before a Special Court . — Save as otherwise provided in this Act, the provisions of the Code (including the provisions as to bail and bonds) shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Sessions and the person conducting a prosecution before Special Court, shall be deemed to be a Public Prosecutor.

12-B. Grant of injunction, etc., by civil courts. —  No civil court shall grant an injunction or make any order for any other relief against the Central Government or any State Government or a Public Officer in respect of any act done or purporting to be done by such Government, or such officer in his official capacity, under this Act or any order made thereunder, until after the notice of the application for such injunction or other relief has been given to such Government or Officer.

13. Presumption as to orders. — Where an order purported to have been made and signed by an authority in exercise of any power conferred by or under this Act, a court shall presume that such order was so made by that authority within the meaning of the Indian Evidence Act (1 of 1872).

14. Burden of proof in certain cases. — Where a person is prosecuted for contravening any order made under Section 3 which prohibits him from doing any act, or being in possession of a thing without lawful authority or without a permit, licence or other document, the burden of proving that he has such authority, permit, licence or other document shall be on him.

15. Protection of action taken under Act. — (1) No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done in pursuance of any order made under Section 3.

(2) No suit or other legal proceeding shall lie against the Government for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of any order made under Section 3.

15-A. Prosecution of public servants. — Where any person who is a public servant is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his duty in pursuance of an order made under Section 3, no court shall take cognizance of such offence except with the previous sanction, —

(a) of the Central Government, in the case of a person who is employed or, as the case may  be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union;

(b) of the State Government, in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the State.

16. Repeals and savings. — (1) The following laws are hereby repealed :

(a) the Essential Commodities Ordinance, 1955 (1 of 1955);

(b) any other law in force in any State immediately before the commencement of this Act in so far as such law controls or authorises the control of the production, supply and distribution of, and trade and commerce, in any essential commodity.

(2) Notwithstanding such repeal, any order made or deemed to be made by any authority whatsoever, under any law repealed thereby and in force immediately before the commencement of this Act, shall, in so far as such order may be made under this Act, be deemed to be made under this Act, and continue in force, and accordingly any appointment made, licence or permit granted, or direction issued under any such order and in force immediately before such commencement shall continue in force until and unless it is superseded by any appointment made, licence or permit granted, or direction issued under this Act.

(3) The provisions of sub-section (2) shall be without prejudice to the provisions contained in Section 6 of the General Clauses Act, 1897 (10 of 1897); which shall also apply to the repeal of the Ordinance or other law referred to in sub-section (1) as if such Ordinance or other  law had been an enactment.

[1] Ins. by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[2] Clause. (i-a) of Section 2 is renumbered as clause. (ii-a) and before cl. (ii-a) as so renumbered, cl. (i-a) is ins. by Act No. 18 of 1981, for fifteen years (w.e.f. 1-9-1982).
[3] After Clause (e) of Section 2, Clause (f) was ins. by Act No. 18 of 1981, Section 3 temporarily for 5 years, for ten years (w.e.f. 1-9-1982).
[4] Subs. by Act No. 18 of 1981, for fifteen years (w.e.f. 1-9 1982).
[5] Subs. by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[6] Subs. by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[7] Subs. by Act No. 42 of 1986.
[8] Omitted by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[9] Omitted by Act No. 18 of 1981.
[10] Ins. by Act No. 34 of 1984.
[11] Subs. by Act No. 42 of 1986 for “six percent”.
[12] Ins. by Act No. 42 of 1986.
[13] Ins. by Act No. 42 of 1986.
[14] Ins. by Act No. 42 of 1986.
[15] Subs. by Act No. 42 for “six percent”.
[16] Added by Act No. 18 of 1981, for fifteen years (w.e.f. 1-9-1982).
[17] Added by Act No. 18 of 1981 for fifteen years (w.e.f. 1-9-1982).
[18] Ins. by Act No. 34 of 1993 (w.e.f. 27-8-1992).
[19] Ins. by Act. No. 73 of 1986 (w.e.f. 1-5-1987).
[20] Ins. by Act No. 73 of 1986 (w.e.f. 1-5-1987
[21] Omitted by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[22] Subs. by Act No. 18 of 1981 (w.e.f. 1-9-1982).
[23] Subs. by Act No. 18 of 1981 (w.e.f. 1-9-1982)
[24] Ins. by Act No. 42 of 1986.
[25] Ins. by Act No. 73 of 1986, (w.e.f. 1-5-1987).

Committees and advisory Board on Child Labour

In terms of the Provisions of Section 5 of the Child Labour (Prohibition & Regulation) Act, 1986, further occupations and processes may be added to the Schedule of the Act as per the recommendations of the Child Labour Technical Advisory Committee (CLTAC). The Committee consists of a Chairman and nine other Members appointed in terms of Child Labour (Prohibition & Regulation) Rules. The Composition of the CLTAC may be seen by clicking here.

Besides, CLTAC, a high level National Authority for Elimination of Child Labour has been constituted under the Chairmanship of Hon’ble Labour Minister to lay down policies and programmes for elimination of child labour, particularly, in hazardous employments. The Authority is also expected to coordinate implementation of child labour related projects of various Ministries/Departments of the Central Government. Composition of the Authority may be seen by clicking here.

In addition, a Central Advisory Board on Child Labour has also been constituted to review the implementation of the existing legislations and suggest measures for welfare of working children. Current Composition of the Board may be seen by clicking here.

Finally, in order to monitor the functioning of the NCLPs, a Central Monitoring Committee has been formed. The Committee sees the overall supervision, monitoring and evaluation of the National Child Labour Projects. It is set up under the Chairmanship of Secretary, Ministry of Labour & Employment with representative of State Governments and concerned Ministries/Departments. The composition of the Committee may be seen by clicking here. The State Governments have also been advised to set up State Level Monitoring Committees similar to the Central Monitoring Committee to monitor functioning of National Child Labour Projects in their States.

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TECHNICAL ADVISORY COMMITTEE ON CHILD LABOUR

The Child Labour Technical Advisory Committee (TAC) has been set up in accordance with the provisions of Section 5 of the Child Labour (prohibition & Regulation) Act, 1986. As per Section 5 of the Act,

(i) The Central Government may, by notification in the official Gazette, constitute an advisory committee to be called the Child Labour Technical Advisory Committee (hereinafter in this section referred to as the Committee) to advise the Central Government for the purpose of addition of occupations and processes to the Schedule.

(ii) The Committee shall consist of a Chairman and such other members not exceeding ten, as may be appointed by the Central Government.

(iii) The Committee shall meet as often as it may consider necessary and shall have power to regulate its own procedure.

(iv) The Committee may, if it deems it necessary so to do, constitute one or more sub-committees and may appoint to any such sub-committee, whether generally or for the consideration of any particular matter, any person who is not a member of the Committee.

(v) The term of office of, the manner of filling casual vacancies in the office of, and the, allowances, if any, payable to, the Chairman and other members of the Committee, and the conditions and restrictions subject to which the Committee may appoint any person who is not a member of the committee as a member of any of its sub-committees shall be such as may be prescribed.

2. The Committee was first constituted on 03.08.1987 and last reconstituted on05.02.1996.

3. The Committee consists of a Chairman and nine other members. All the members of the committee are technical experts, majority from medicine, except for the JS, In charge of Child Labour Division in the M/o Labour.

4. At present, the composition of the committee is as follows:

1. D.G., Indian Council of Medical Research, New Delhi-Chairman.
2. Add!. D.G., Health Services, Govt. of India, New Delhi-Member
3. D.G. FASLI, M/o Labour, Mumbai – Member
4. Director, National Institute of Occupational Health – Member
5. Director, Industrial Toxicology Research Centre, Lucknow-Member
6. Director, Ballabh Bhai Patel Chest Institute, New Delhi-Member
7. Director, Paediatrics, AIIMS, New Delhi -Member
8. Director, Medical Services, Tamilnadu -Member
9. Director, Medical Services, Uttar Pradesh -Member
10. Joint Secretary/Incharge of Child Labour Division -Member

5. As of now, a total of 13 occupations and 57 processes have been included in the Schedule to the Act and Section 3 of the Act prohibits employment or work of a child in any of these occupations or processes.

6. The Last addition in the list of occupations/processes in the Schedule was effected vide Gazette notification dated 10.05.2001.

7. The last meeting of the Committee was held on 25.04.2002.

2. The Child Labour Cell of the Ministry of Labour will function as the Secretariat of the Monitoring Committee.

The Scheme for National Child Labour Projects (NCLP)

F.No. H- 11013/3/98-CL Government of India Ministry of Labour
New Delhi, the 30th December, 1998

ORDER

The Scheme for National Child Labour Projects (NCLP) provides for a Central Monitoring Committee for the overall ‘supervision, monitoring and evaluation of the National Child Labour Projects. It has, therefore, been decided to constitute a Central Monitoring Committee for NCLP with the following composition:­
~
­
(i) Secretary, Ministry of Labour – Chairperson
(ii) Secretary, Women and Child Development Department,
Government of Andhra Pradesh – Member
(iii) Labour Secretaries of the States of Bihar, Gujarat,
Karnataka, Madhya Pradesh, Maharashtra, Orissa,
Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal – Members
(iv) Joint Secretary, Department of Education, Ministry of Human Resource Development – Member
(v) Financial Advisor, ,Ministry of Labour – Member
(vi) Joint Secretary, Ministry of Rural Areas and Employment – Member
(vii) Joint Secretary, Women and Child Development – Member
(viii) Director, V.V. Giri National Labour Institute, Noida – Member
(ix) Joint Secretary, Child Labour Cell – Member Secretary

(Chitra Chopra)

Joint Secretary to the Govt. of India

To
All the Members of Monitoring Committee
Copy to :
(i) . PS to L.M.
(ii) PPS to Secretary(Labour) ” (iii) PS to Add!. Secretary(Labour)
(Chitra Chopra) Joint Secretary to the Govt. of India

(Source: labour.nic.in)

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National Authority for Elimination of Child Labour

(To be published in the Gazette of India, Part I Section II)
No.Z-19011/5/94-CL
Government of India
Ministry of Labour
******
New Delhi, dated 26-9-1994

RESOLUTION

Keeping in view the provision as laid down in the Constitution of India with
regard to prohibition of employment of children in hazardous employments, the
ILO standards concerning employment of child labour and the need for
systematic action to progressively eliminate child labour altogether, the
Government of India has decided to constitute a National Authority for
elimination of Child Labour. Pending creation of an autonomous statutory body
for the purpose, it has been decided to constitute the Authority as under:-
1. Ministry of State for Labour – Chairman
2. Secretary, Ministry of Labour – Member
3. Secretary, Expenditure, Ministry of Finance – Member
4. Secretary, Department of Women Child – Development, Ministry of Human Resource Development – Member
5. Secretary, Department of education, Ministry of Human Resource Development – Member
6. Secretary, Ministry of Textile – Member
7. Secretary, Ministry of Welfare – Member
8. – Secretary, Ministry of Rural Development – Member
9. – Secretary, Department of Health, Ministry of Health – Member
10. Secretary, Department of Family Welfare, Ministry of Health and Family Welfare – Member
11. Secretary, Ministry of I&B – Member
12. Director Incharge of Child Labour Ministry of Labour – Member Secretary
-2-
The Functions of the National Authority for Elimination of Child Labour will be:-
(I) To lay down the policies and programme for elimination of child labour particularly in hazardous employments.
(II) To monitor the progress of implementation of programmes, project and Schemes for elimination of child labour.
(III) To co-ordinate implementation of child labour elimination related projects of the various sister Ministries of the Government of India.

ORDER

Ordered that a copy of the Resolution be communicated to all the Members.
Ordered also that the Resolution be published in the Gazette of India for general information.

(S.GOPALAN)
Secretary to Government of India
To
The Manager,
Government of India Press,
Ring Road, Mayapuri Industrial Area,
New Delhi.

The Child Labour (Prohibition and Regulation) Rules, 1986

G.S.R. 847(E), dated 10th August, 1988 – In exercise of the powers conferred by sub-section (1) of Sec. 18 of the said Act, the Central Government, hereby makes the following rules, namely :

Comment
Rule-making power – The general power of framing rules for effectuating the purposes of the Act, would plainly authorize and sanctify the framing of such a rule.

1. Short title and commencement – (1) These rules may be called the Child Labour (Prohibition and Regulation) Rules, 1988.
(2) They shall come into force on the date of their publication in the official Gazette.

Comment
These rules have been farmed by the Central Government in the exercise of the powers conferred by Sec. 18 (1) of the Child Labour (Prohibition and Regulation) Rules, 1986.

Rules – Whether validly farmed – The question whether rules are validly framed to carry out the purposes of the Act can be determined on the analysis of the provisions of the Act.

2. Definitions – In these rules, unless the context otherwise requires –
(a)“Act” means the Child Labour (Prohibition and Regulation) Rules, 1986 (61 0f 1986);
(b)“Committee” means the Child Labour Technical Advisory Committee constituted under sub-section (1) of Sec. 5 of the Act;
(c)“Chairman” means the Chairman of the Committee appointed under sub-section (2) of Sec. 5 of the Act;
(d)“Form” means a Form appended to these ruels;
(e)“register” means the register required to be maintained under Sec. 11 of the Act;
(f)“Schedule” means the schedule appended to the Act;
(g)“section” means a section of the Act.

Comment
This rule defines the various expressions occurring in the Rules.

Interpretation by a court – The Court can merely interpret the section; it cannot re-write, re-cast or re-design the section.

Otherwise – What amounts to – The words “otherwise” is not to be construed ejusdem generic with the word “circulars, advertisement”.

3. Term of office of the members of the Committee –
(1) The term of office of the members of the Committee shall be one year from the date on which their appointment is notified in the official Gazette;
Provided that the Central Government may extend the term of office of the member of the Committee for a maximum period of two years;
Provided further that the member shall, notwithstanding the expiration of his term, continue to hold office until his successor enters upon his office.
(2) The members appointed under sub-rule (1) shall be eligible for re-appointment.

Comment
“shall” cannot be interpreted as “may”

Proviso – In Abdul Jabar Butt v. State of Jammu and Kashmir, it was held that a proviso must be considered with relation to the principal matter to which it stands as a proviso.

4. Secretary to the Committee – The Central Government may appoint an officer not below the rank of an Under-Secretary to the Government of India as Secretary of the Committee.

Comment
This rule empowers the Central Government to appoint an officer not below the rank of an Under-Secretary to the Government of India as the Secretary to the Child Labour Technical Advisory Committee.

5. Allowances to non-official members – The non-official members and Chairman of the Committee shall be paid such fees and allowances as may be admissible to the officers of the Central Government drawing a pay of rupees four thousand and five hundred or above.

6. Resignation – (1) A member may resign his office by writing under his hand addressed to the Chairman.
(2) The Chairman may resign his office by writing under his hand addressed to the Central Government.
(3) The resignation referred to in sub-rule (1) and sub-rule (2) shall take effect from the date of its acceptance or on the expiry of thirty days from the date of receipt of such resignation, whichever is earlier, by the Chairman or the Central Government, as the case may be.

7. Removal of Chairman or member of the Committee – The Central Government may remove the Chairman or any member of the Committee at any time before the expiry of the term of office after giving him a reasonable opportunity of showing cause against the proposed removal.

Comment
This rule lays down procedure for removal of Chairman or member of the Committee by the Central Government.

8. Cessation of membership – if a member –
(a)is absent without leave of the Chairman for three or more consecutive meetings of the Committee; or
(b)is declared to be of unsound mind by a competent court; or
(c)is or has been convicted of any offence which, in the opinion of the Central Government, involves moral turpitude; or
(d)is, or at any time, has been adjudicated insolvent or has suspended his debts or has compounded with his creditors, shall cease to be a member of the Committee.

Comment
This rule deals with the matter relating to cessation of membership.

9. Filling up of casual vacancies – in case a member resigns his office under rule 6 or ceases to be a member under rule 8, the casual vacancy thus caused shall be filled up by the Central Government and the member so appointed shall hold office for the unexpired portion of the term of his predecessor.

Comment
This rule empower the Central Government to fill up casual vacancies and it lays down that the member so appointed shall hold office for the unexpired portion of the term of his predecessor.

10. Time and place of meetings – The Committee shall meet at such times and places as the Chairman may fix in this behalf.

11. Notice of meetings – The Secretary to the Committee shall give at least seven days notice to every member of the Committee of the time and place fixed for each meeting along with the list of business to be transacted at the said meeting.

12. Presiding at meetings – The Chairman shall preside at every meeting of the Committee at which he is present; if, however, the Chairman is unable to attend a meeting, any member elected by the members present among themselves shall preside at the meeting.

Comment
“Shall” – It is well-known principle that in the interpretation of statutes that where the situation and the context warrants it, the word “shall” used in a section or rule of a statute has to be construed as “may”.

13. Quorum – No business shall be transacted at a meeting of the Committee unless atleast three members of the Committee other than the Chairman and the Secretary are present:
Provided that at any meeting in which less than three of the total members are present, the Chairman may adjourn the meeting to a date as he deems fit and inform the members present and notify other members that the business of the scheduled meeting shall be disposed of at the adjourned meeting irrespective of the quorum and it shall be lawful to dispose of the business at such adjourned meeting irrespective of the member of members attending the meeting.

Comment
Scope of proviso – The scope of a proviso is well settled. In Ram Narain Sons Ltd. V. Asstt. Commissioner of Sales Tax, it was held :
“It is a cardinal rule of interpretation that a proviso to a particular provision of statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other.”

14. Decision by majority – All questions considered at a meeting of the Committee shall be decided by a majority of votes of the members present and voting and in the event of equality of votes, the Chairman, or in the absence of Chairman, the member presiding at the meeting, as the case may be, shall have a second or casting cote.

Comment
This rule lays down that the matters considered by the Committee in its meeting should be decided by a majority votes of the members present. The rule further lays down that the Chairman or in his absence the member presiding at the meeting shall have a casting vote.

15. Sub-Committees – The Committee may constitute one or more Sub-Committees, whether consisting only of members of the Committee or partly of members of the Committee and partly of other persons as it thinks fit, for such purposes, as it may decide and any Sub-Committee so constituted shall discharge such functions as may be delegated to it by the Committee.

16. Register to be maintained under Sec. 11 of the Act. – (1) Every occupier of an establishment shall maintain a register in respect of children employed or permitted to work, in Form A.
(2) The register shall be maintained on a yearly basis but shall be retained by the employer for a period of three years after the date of the last entry made therein.

Comment
Under this rule every occupier of an establishment is required to maintain an yearly register showing the children employed or permitted to work and to retain such registers for a period of three years.

17. Certificate of age. - (1) All young persons in employment in any of the occupations set-forth in Part A of the Schedule or in any workshop wherein any of the processes set forth in Part B of the Schedule is carried on, shall produce a certificate of age from the appropriate medical authority, whenever required to do so by an Inspector.
(2) The certificate of age referred to in sub-rule (1) shall be issued in Form ‘B’.
(3) The charges payable to the medical authority for the issue of such certificate shall be the same as prescribed by the State Government or the Central Government, as the case may be for their respective Medical Boards.
(4) The charges payable to the medical authority shall be borne by the employer of the young person whose age is under question.

Explanation - For the purposes of sub-rule (1), the appropriate “Medical authority” shall be Government medical doctor not below the rank of an Assistant Surgeon of a District or a regular doctor or equivalent rank employed in Employees’ State Insurance dispensaries of hospitals.

Comment
Explanation - It is not well settled that an explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain and clarify certain ambiguities which may have crept in the statutory provision.

FORM A
[See Rule 16(1)]

Year………….

Name and Address of employer ……………………………………………………..
Place of work …………………………………………………………………………….
Nature of work being done by the establishment …………………………………

Sl. No.
Name of Child
Father’s Name
Date of Birth
Permanent Address
Date of joining the establishment
1
2
3
4
5
6

Nature of Workon which employed

Daily hours of work
Intervals of rest
Wages paid
Remarks
7
8
9
10
11

FORM B
(Certificate of Age)
[See Rule 17 (2)]
Certificate No ……………………

I hereby certify that I have personally examined (name …………………………….
Son/daughter of ………………………………………………………….. residing at ……………………………. and that he/she has completed his/her fourteenth year and his/her age, as nearly as can be ascertained from my examination is ……………………………. years (Completed).

His/Her descriptive marks

Are ………………………………………………………………………………………………….
Thumb-impression/signature of child …………………………

Place…………………………. Medical Authority

Date………………………… Designation

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Supplement

The Child Labour (Prohibition and Regulation) Act, 1986

S.O. 333(E), dated 26th may, 1933 – in exercise of the powers conferred by sub-section(3) of Sec.1 of the Child Labour (Prohibition and Regulation)Act, 1986 (61 of 1986), the Central Government hereby appoints the 26th day of May, 1993 as the date of which the provisions of Part III of the said Act shall come into force in respect of all classes of establishments, throughout the territory of India, in which none of the occupations and processes referred to in Sec. 3 of the said Act is carried on.

THE SCHEDULE
(See Sec. 3)

PART A

Occupations
Any occupation concerned with: -
(1)Transport of passengers, goods or mails by railways;
(2)Cinder picking, clearing of an ash pit or building operation in the railway premises;
(3)Work in a catering establishment at a railway station, involving the movement of a vendor or any other employee of the establishment from the one platform to another or in to or out of a moving train;
(4)Work relating to the construction of a railway station or with any other work where such work is done in close proximity to or between the railway lines;
(5)A port authority within the limits of any port;
* (6) Work relating to selling of crackers and fireworks in shops with temporary
licenses;
# (7) Abattoirs/Slaughter House;
$ (8) Automobile workshops and garages;
(1)Foundries;
(2)Handling of toxic or inflammable substances or explosives;
(3)Handloom and power loom industry;
(4)Mines (underground and under water) and collieries;
(5)Plastic units and fiberglass workshops;

PART B

Processes
(1)Beedi-making.
(2)Carpet-weaving.
(3)Cement manufacture, including bagging of cement.
(4)Cloth printing, dyeing and weaving.
(5)Manufacture of matches, explosives and fire-works.
(6)Mica-cutting and splitting.
(7)Shellac manufacture.
(8)Soap manufacture.
(9)Tanning.
(10)Wool-cleaning.
(11)Building and construction industry.
* (12) Manufacture of slate pencils (including packing).
* (13) Manufacture of products from agate.
* (14) Manufacturing processes using toxic metals and substances such as lead,
mercury, manganese, chromium, cadmium, benzene, pesticides and
asbestos.
# (15) “Hazardous processes” as defined in Sec. 2 (cb) and ‘dangerous
operation’ as notice in rules made under section 87 of the Factories Act, 1948 (63 of 1948)
# (16) Printing as defined in Section 2(k) (iv) of the Factories Act, 1948 (63 of
1948)
# (17) Cashew and cashewnut descaling and processing.
# (18) Soldering processes in electronic industries.
$ (19) ‘Aggarbatti’ manufacturing.
(1)Automobile repairs and maintenance including processes incidental thereto namely, welding, lathe work, dent beating and painting.
(2)Brick kilns and Roof tiles units.
(3)Cotton ginning and processing and production of hosiery goods.
(4)Detergent manufacturing.
(5)Fabrication workshops (ferrous and non ferrous)
(6)Gem cutting and polishing.
(7)Handling of chromite and manganese ores.
(8)Jute textile manufacture and coir making.
(9)Lime Kilns and Manufacture of Lime.
(10)Lock Making.
(11)Manufacturing processes having exposure to lead such as primary and secondary smelting, welding and cutting of lead-painted metal constructions, welding of galvanized orzinc silicate, polyvinyl chloride, mixing (by hand) of crystal glass mass, sanding or scraping of lead paint, burning of lead in enameling workshops, lead mining, plumbing, cable making, wiring patenting, lead casting, type founding in printing shops. Store type setting, assembling of cars, shot making and lead glass blowing.
(12)Manufacture of cement pipes, cement products and other related work.
(13)Manufacture of glass, glass ware including bangles, florescent tubes, bulbs and other similar glass products.
(14)Manufacture of dyes and dye stuff.
(15)Manufacturing or handling of pesticides and insecticides.
(16)Manufacturing or processing and handling of corrosive and toxic substances, metal cleaning and photo engraving and soldering processes in electronic industry.
(17)Manufacturing of burning coal and coal briquettes.
(18)Manufacturing of sports goods involving exposure to synthetic materials, chemicals and leather.
(19)Moulding and processing of fiberglass and plastic.
(20)Oil expelling and refinery.
(21)Paper making.
(22)Potteries and ceramic industry.
(23)Polishing, moulding, cutting, welding and manufacturing of brass goods in all forms.
(24)Processes in agriculture where tractors, threshing and harvesting machines are used and chaff cutting.
(25)Saw mill – all processes.
(26)Sericulture processing.
(27)Skinning, dyeing and processes for manufacturing of leather and leather products.
(28)Stone breaking and stone crushing.
(29)Tobacco processing including manufacturing of tobacco, tobacco paste and handling of tobacco in any form.
(30)Tyre making, repairing, re-treading and graphite benefication.
(31)Utensils making, polishing and metal buffing.
(32)‘Zari’ making (all processes)’.
@ (52) Electroplating;
(1) Graphite powdering and incidental processing;
(2) Grinding or glazing of metals;
(3) Diamond cutting and polishing;
(4) Extraction of slate from mines;
(5) Rag picking and scavenging.

a.for item (2), the following item shall be substituted, namely:-
‘(2) carpet weaving including preparatory and incidental process thereof”;
b.for item(4), the following item shall be substituted, namely:-
“(4) cloth printing, dyeing and weaving including processes preparatory and incidental thereto:
c. for item (11) the following shall be substituted, namely:-
“(11) Building and Construction Industry including processing and polishing of granite stones”.

* Ins. by Notification No. S. O. 404(E) dated the 5th June
1989 published in the Gazette of India, Extraordinary.
# Ins. by Notification No. S. O. 263 (E) dated 29th March,
1994 published in the Gazette of India, Extraordinary.
$ Ins. Sr. No. 8-13 in Part A and Sr. No. 19-51 in Part B by
Notification No. S. O. 36 (E) dated 27th January 1999
published in the Gazette of India, Extraordinary.
@ Ins.Sr. No. 52 – 57 part B by Notification No. S.O. 397 (E) dated the 10th May 2001 published in the Gazette of India, Extraordinary.

(Source: labour.nic.in)

The Child Labour (Prohibition and Regulation) Act, 1986.

(Act No. 61 of 1986)
[23rd December, 1986]

Be it enacted by Parliament in the Thirty-seventh Year of the Republic of India as follows:

Comment
Social and beneficial legislation – Social legislation is designed to protect the interest of a class of society who, because of their economic conditions, deserves such protection. With a view to pass the test of reasonable classification there must exist intelligible differentia between persons or thing grouped together from those who have been left out and there must by a reasonable nexus with the object to be achieved by the legislation.
The Court must strive to so interpret the statute as to protect and advance the object and purpose of enactment. Any narrow or technical interpretation of the provisions would defeat the legislative policy. The Court must, therefore, keep the legislative policy in mind in applying the provisions of the Act to the facts of the case.

PART I

Preliminary

1. Short title, extent and commencement – (1) This Act may be called the Child Labour (Prohibition and Regulation) Act, 1986.

(1)It extends to the whole of India.
(3) The provisions of this Act, other then Part III, shall come into force at once, and Part III shall come into force on such date as the Central Government may, by notification in the official Gazette, appoint, and different dates may be appointed for different States and for different classes of establishments.

Comment
May and shall – Where the Legislature uses two words “may” and “shall” in two different parts of the same provision, prima facie it would appear that the Legislature manifested its intension to make one part directory and another mandatory. But that by itself is not decisive. The power of the Court still to ascertain the real intension of the Legislature by carefully examining the scope of statute to find out whether the provision is directory or mandatory remains unimpaired even where both the words are used in the same provision.

In interpreting the provisions the exercise undertaken by the Court is to make explicit the intention of the Legislative which enacted the legislation. It is not for the Court to reframe the legislation for the very good reason that the powers to “legislate” have not been conferred on the Court.

In order to sustain the presumption of constitutionality of a legislative measure, the Court can take into consideration matters of common knowledge, matters of common report, the history of the times and also assume every state of facts which can be conceived existing at the time of the legislation.

2. Definitions – In this Act, unless the context otherwise requires,

(i)“appropriate Government” means, in relation to an establishment under the control of the Central Government or a railway administration or a major port or a mine or oilfield, the Central Government, and in all other cases, the State Government;
(ii)“child“ means a person who has not completed his fourteenth year of age;
(iii)“day” means a period of twenty-four hours beginning at midnight;
(iv)“establishment” includes a shop, commercial establishment, work-shop, farm, residential hotel, restaurant, eating-house, theatre or other place of public amusement or entertainment;
(v)“family” in relation to an occupier, means the individual, the wife or husband, as the case may be, of such individual, and their children, brother or sister of such individual;
(vi)“occupier”, in relation to an establishment or a workshop, means the person who has the ultimate control over the affairs of the establishment or workshop;
(vii)“port authority” means any authority administering a port;
(viii)“prescribed” means prescribed by rules made under Sec.18;
(ix)“week” means a period of seven days beginning at midnight on Saturday night or such other night as may be approved in writing for a particular area by the Inspector;
(x)“workshop” means any premises (including the precincts thereof) wherein any industrial process in carried on, but does not include any premises to which the provisions of Sec. 67 of the Factories Act, 1948 (63 of 1948), for the time being, apply.

Comment
This section defines the various words and expressions occurring in the Act.

Interpretation of section – The Court can merely interpret the section; it cannot re-write, re-cast or re-design the section.

Ambiguous expression – Courts must find out the literal meaning of the expression in the task of construction. In doing so if the expressions are ambiguous then the construction that fulfils the objects of the legislation must provide the key to the meaning. Courts must not make mockery of legislation and should take a constructive approach to fulfil the purpose and for that purpose, if necessary, iron out the creases.

PART II

Prohibition of Employment of Children in certain Occupations and Processes

3. Prohibition of employment of children in certain occupations and processes – No child shall be employed or permitted to work in any of the occupations set forth in Part A of the Schedule or in any workshop wherein any of the processes set forth in Part B of the Schedule is carried on :
Provided that nothing in this section shall apply to any workshop wherein any process is carried on by the occupier with the aid of his family or to any school established by or receiving assistance or recognition from, Government.

Comment
This section imposes prohibition on employment of children in the occupation and processes specified in the Schedule.

Proviso – A proviso is intended to limit the enacted provision so as to except something which would have otherwise been within it or in some measure to modify the enacting clause. Sometimes proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself.

4. Power to amend the Schedule – The Central Government, after giving by notification in the official Gazette, not less than three months’ notice of its intention so to do, may, by like notification, add any occupation or process to the Schedule and thereupon the Schedule shall be deemed to have been amended accordingly.

Comment
This section empowers the Central Government to amend the Schedule so as to include therein any occupation or process considered necessary.

Construction of a section – it is en elementary rule that construction of a section is to be made of all parts together. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different part of the same section.

5. Child Labour Technical Advisory Committee – (1) The Central Government may, by notification is in official Gazette, constitute an advisory committee to be called the Child Labour Technical Advisory Committee (hereinafter in this section referred to as the Committee) to advise the Central Government for the purpose of addition of occupations and processes to the Schedule.
(2) The Committee shall consist of a Chairman and such other members not exceeding ten, as may be appointed by the Central Government.
(3) The Committee shall meet as often as it may consider necessary and shall have power to regulate its own procedure.
(4) The Committee may, if it deems it necessary so to do, constitute one or more sub-committees and may appoint to any such sub-committee, whether generally or for the consideration of any particular matter, any person who is not a member of the Committee.
(5) The term of office of, the manner of filling causal vacancies in the office of, and the allowances, if any, payable to, the Chairman and other members of the Committee, and the conditions and restrictions subject to which the Committee may appoint any person who is not a member of the Committee as a member of any of its sub-committees shall be such as may be prescribed.

Comment
This section empowers the Central Government to constitute the Child Labour Technical Advisory Committee for giving advice in the matter of inclusion of any occupation and process in the Schedule.

PART III

Regulation of Conditions of Work of Children

6. Application of Part – The provisions of this Part shall apply to an establishment or a class of establishments in which none of the occupations or processes referred to in Sec. 3 is carried on.
Comment
This section lays down that provisions of this Part shall apply to an establishment in which none of the prohibited occupations or processes is carried on.

7. Hours and period of work – (1) No child shall be required or permitted to work in any establishment in excess of such number of hours as may be prescribed for such establishment or class of establishments.
(2) The period of work on each day shall be so fixed that no period shall exceed three hours and that no child shall work for more than three hours before he has had an interval for rest for at least one hour.
(3) The period of work of a child shall be so arranged that inclusive of his interval for rest, under sub-section(2), it shall not be spread over more than six hours, including the time spent in waiting for work on any day.
(2)No child shall be permitted or required to work between 7 p.m. and 8 a.m.
(3)No child shall be permitted or required to work overtime.
(4)No child shall be permitted or required to work in any establishment on any day on which he has already been working in another establishment.

Comment
This section prescribes working hours for a child labour.
Provision if mandatory or directory – The surest test for determination as to whether the provisions is mandatory or directory is to see as to whether the sanction is provided therein.

8. Weekly holidays – Every child employed in an establishment shall be allowed in each week, a holiday or one whole day, which day shall be specified by the occupier in a notice permanently exhibited in a conspicuous place in the establishment and the day so specified shall not be altered by the occupier more than once in three months.

Comment
This section lays down that a weekly holiday should be allowed to every child labour.

9. Notice to Inspector – (1) Every occupier in relation to an establishment in which a child was employed or permitted to work immediately before the date of commencement of this Act in relation to such establishment shall, within a period of thirty days from such commencement, send to the Inspector within whose local limits the establishment is situated, a written notice containing the following particulars, namely :
(a)the name and situation of the establishment;
(b)the name of the person in actual management of the establishment;
(c)the address to which communications relating to the establishment should be sent; and,
(d)the nature of the occupation or process carried on in the establishment.
(2) Every occupier, in relation to an establishment, who employs, or permits to work, any child after the date of commencement of this Act in relation to such establishment, shall, within a period of thirty days from the date of such employment, send to the Inspector within whose local limits the establishment is situated, a written notice containing the following particulars as are mentioned in sub-section (1).
Explanation – For the purposes of sub-sections (1) and (2), “date of commencement of this Act, in relation to an establishment” means the date of brining into force of this Act in relation to such establishment.

(3) Nothing in Secs. 7,8and 9 shall apply to any establishment wherein any process is carried on by the occupier with the aid of his family or to any schools established by, or receiving assistance or recognition from, Government.

Comment
This section makes provision for furnishing of information regarding employment of a child labour to Inspector.

Explanation – It is now well settled that an explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision.

10. Disputes as to age – If any question arises between an Inspector and an occupier as to the age of any child who is employed or is permitted to work by him in an establishment, the question shall, in the absence of a certificate as to the age of such child granted by the prescribed authority, be referred by the Inspector for decision to the prescribed medical authority.
Comment

This section makes provision for settlement of disputes as to age of any child labour.
11. Maintenance of register – There shall be maintained by every occupier in respect of children employed or permitted to work in any establishment, a register to be available for inspection by an Inspector at all times during working hours or when work is being carried on in any such establishment showing –
(a)the name and date of birth of every child so employed or permitted to work;
(b)hours and periods of work of any such child and the intervals of rest to which he is entitled;
(c)the nature of work of any such child; and
(d)such other particulars as may be prescribed

Comment
This section makes provision for maintenance of register in respect of child labour.

12. Display of notice containing abstract of Secs. 3 and 14 – Every railway administration, every port authority and every occupier shall cause to be displayed in a conspicuous and accessible place at every station on its railway or within the limits of a port or at the place of work, as the case may be, a notice in the local language and in the English language containing an abstract of Secs. 3 and 14.

Comment
This section makes provision for display of notice in a conspicuous place at every railway station or port or place of work regarding prohibition of employment of child labour, penalties, etc., in the local languages and in the English language.

13. Health and safety – (1) The appropriate Government may, by notification in the official Gazette, make rules for the health and safety of the children employed or permitted to work in any establishment or class of establishments.
(2) Without prejudice to the generality of the foregoing provisions, the said rules may provide for all or any of the following matters, namely :
(a)cleanliness in the place of work and its freedom for nuisance;
(b)disposal of wastes and effluents;
(c)ventilation and temperature;
(d)dust and fume;
(e)artificial humidification;
(f)lighting;
(g)drinking water;
(h)latrine and urinals;
(i)spittoons;
(j)fencing of machinery;
(k)work at or near machinery in motion;
(l)employment of children on dangerous machines;
(m)instructions, training and supervision in relation to employment of children on dangerous machines;
(n)device for cutting off power;
(o)self-acting machinery;
(p)easing of new machinery;
(q)floor, stairs and means of access;
(r)pits, sumps, openings in floors, etc.;
(s)excessive weight;
(t)protection of eyes;
(u)explosive or inflammable dust, gas, etc.;
(v)precautions in case of fire;
(w)maintenance of buildings; and
(x)safety of buildings and machinery.
Comments
This section lays down that the Government is required to make rules for the health and safety of the child labour.

PART IV

Miscellaneous

14. Penalties – (1) Whoever employs any child or permits any child to work in contravention of the provisions of Sec. 3 shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees or with both.
(2) Whoever, having been convicted of an offence under Sec. 3, commits a like offence afterwards, he shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to two years.
(3) Whoever –
(a)fails to give notice as required by Sec. 9, or
fails to maintain a register as required by Sec. 11 or makes any false entry in any such register; or
(b)fails to display a notice containing an abstract of Sec. 3 and this section as required by Sec. 12; or
(c)fails to comply with or contravenes any other provisions of this Act or the rules made thereunder;
shall be punishable with simple imprisonment which may extend to one month or with fine which may extend to ten thousand rupees or with both

Comment
This section makes provision for penalty for contravention of the provisions of the Act.

Penalty – Mens rea – Essential – Penalty proceedings are quasi criminal proceedings. Before penalty can be imposed it has to be ensured that means rea has been established.
Penal provision – Object of – The law in its wisdom seeks to punish the guilty who commits the sin, and not his son, who is innocent.

15. Modified application of certain laws in relation to penalties – (1) Where any person is found guilty and convicted of contravention of any of the provisions mentioned in sub-section(2), he shall be liable to penalties as provided in sub-sections (1) and (2) of Sec. 14 of this Act and not under the Acts in which those provisions are contained.

(2)The provisions referred to in sub-section (1) are the provisions mentioned below:

(a)Section 67 of the Factories Act, 1948 (63 of 1948);
(b)Section 40 of the Mines Act, 1952 (35 of 1952);
(c)Section 109 of the Merchant Shipping Act, 1958 (44 of 1958); and
(d)Section 21 of the Motor Transport Workers Act, 1961 (27 of 1961).

Comment
This section makes provision of penalties under the Act even when any person is found guilty and convicted of contravention of any of the provisions of Sec. 67 of the Factories Act, 1948, Sec. 40 of the Mines Act, 1952, Section 109 of the Merchant Shipping Act, 1958 and Sec. 21 of the Motor Transport Workers Act, 1961.

16. Procedure relating to offences – (1) Any person, police officer or Inspector may file a complaint of the commission of an offence under this Act in any Court of competent jurisdiction.
(2) Every certificate as to the age of a child which has been granted by a prescribed medical authority shall, for the purposes of this Act, be conclusive evidence as to the age of the child to whom it relates.

(3) No court inferior to that of a Metropolitan Magistrate or a Magistrate of the first class shall try any offence under this Act.

Comment
This section lays down that any person, police officer or Inspector can make a complaint regarding commission of offences. It also lays down the procedure for disposal of such a complaint.

Court Duty of – The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is used as an instrument of oppression to have an unfair advantage to plaintiff.

17. Appointment of Inspectors –
The appropriate Government may appoint inspectors for the purposes of securing compliance with the provisions of this Act and any inspector so appointed shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 0f 1860).

Comment
This section empowers the appropriate Government to appoint inspectors for securing compliance of the provisions of the Act. Such Inspector is deemed to be a public servant with in the meaning f the Indian Penal Code (45 of 1860).

Public servant – Every public officer is a trustee and in respect of the office he holds and the salary and other benefits which he draws, he is obliged to render appropriate service to the State. If an officer does not behave as required of him under the law he is certainly liable to be punished in accordance with law.

18. Power to make rules – (1) The appropriate Government may, by notification in the official Gazette and subject to the condition of previous publication, make rules for carrying into effect the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :
(a)the term of the office of, the manner of filling casual vacancies of, and the allowances payable to, the Chairman and members of the Child Labour Technical Advisory Committee and the conditions and restrictions subject to which a non-member may be appointed to a sub-committee under sub-section (5) of Sec.5;
(b)number of hours for which a child may be required or permitted to work under sub-section (1) of Sec. 7;
(c)grant to certificates of age in respect of young persons in employment or seeking employment, the medical authorities which may issue such certificate, the form of such certificate, the charges which may be made thereunder and the manner in which such certificate may be issued;

Provided that no charge shall be made for the issue of any such certificate of the application is accompanied by evidence of age deemed satisfactory by the authority concerned;
(d)the other particulars which a register maintained under Sec. 11 should contain.

Comment
This section empowers the appropriate Government to make rule for carrying out the provisions of the Act.

Rules for effectuating the purpose of the Act – The general power of farming rules for effectuating the purposes of the Act, would plainly authorize and sanctify the framing of such a rule.

19. Rules and notifications to be laid before Parliament or State legislature –
(1) Every rules made under this Act by the Central Government and every notification issued under Sec. 4, shall be laid, as soon as may be after it is made or issued, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive session aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule or notification should not be made or issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.
(2)Every rule made by a State Government under this Act shall be laid as soon as may be after it is made, before the Legislature of that State.

Comment
Under this section the rules and notifications are to be laid before Parliament of State Legislature for approval.

20. Certain other provisions of law not barred – Subject to the provisions contained in Sec. 15, the provisions of this Act and the rules made thereunder shall be in addition to, and not in derogation of, the provisions of the Factories Act, 1948 (63 of 1948), the Plantations Labour Act, 1951 (69 of 1951) and the Mines Act, 1952 (35 of 1952).

Comment
This section lays down that the provision of this Act shall be in addition to and not in derogation of, the provisions of the Factories Act, 1948, the Plantations Labour Act, 1951 and the Mines Act, 1952.

21. Power to remove difficulties – (1) If any difficulty arises in giving effect of the provisions of this Act, the Central Government may, by order published in the official Gazette, make such provisions not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removal of the difficulty :
Provided that no such order shall be made after the expiry of a period of three years from the date on which this Act receives the assent of the President.
(2) Every order made under this section shall, as soon as may be after it is made, before the Houses of Parliament.

Comment
Under the provisions of this section the Central Government is empowered to remove difficulties which arise in giving effect to the provisions of this Act.

22. Repeal and savings – (1) The Employment of Children Act, 1938 (26 of 1938) is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken or purported to have been done or taken under the Act so repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act.

Comment
The Employment of Children Act, 1938 (26 of 1938) has been repealed by this section.
Implied repeal – It is well settled that when a competent authority makes a new law which is totally inconsistent with the earlier law and that the two cannot stand together any longer it must be construed that the earlier law had been repealed by necessary implication by the latter law.

23. Amendment of Act 11 of 1948 – In Sec. 2 of the Minimum Wages Act, 1948 –
(i)for Cl. (a), the following clauses shall be subsituated, namely :
“(a) `adolescent’ means a persons who has completed his fourteenth year of age but has not completed his eighteenth year;
(aa)‘adult’ means a person who has completed his eighteenth year of age;”:
(ii) after Cl.(b), the following clause shall be inserted, namely :
“(bb) `child’ means a person who had not completed his fourteenth year of age;”.

Comment
Under this section Sec. 2 of the Minimum Wages Act, 1948 has been amended so as to define the terms “adolescent”, “adult” and “child”.

24. Amendment of Act 69 of 1951 – In the Plantations Labour Act, 1951 –
(a)in Sec.2 in Cls.(a) and (c), for the word “fifteenth”, the word “fourteenth” shall be substituted;
(b)Sec. 24 shall be omitted;
(c)in Sec. 26, in the opening portion, the words “who has completed his twelfth year” shall be omitted.
Comment

Under this section, sec. 2 of the Plantations Labour Act, 1951, has been amended so far as it relates to the employment of child labour
25. Amendment of Act 44 of 1958 – In the Merchant Shipping Act, 1958, in Sec. 109, for the word “fifteen”, the word “fourteen” shall be substituted.

Comment
Under this section Sec. 109 of the Merchant Shipping Act, 1958, has been amended so far as it relates to the employment of child labour.

26. Amendment of Act 27 of 1961 – In the Motor Transport Workers Act, 1961 in Sec.2, in Cls.(a), and (c), for the word “fifteenth”, the word “fourteenth” shall be substituted.

Comment
Under this section, Sec.2 of the Motor Transport Workers Act, 1961, has been amended so far as it relates to the employment of child labour.

(Source: labour.nic.in)

Indian Trusts Act 1882

October 29th 2009 by ngoresources

INDIAN TRUSTS ACT, 1882
[Act No. 2 of Year 1882]

CHAPTER I : PRELIMINARY
1. Short title and commencement
2. Repeal of enactments
3. Interpretation clause- “trust”
CHAPTER II : OF THE CREATION OF TRUSTS
4. Lawful purpose
5. Trust of immovable property
6. Creation of trust
7. Who may create trusts
8. Subject matter of trust
9. Who may be beneficiary
10. Who may be trustee
CHAPTER III : OF THE DUTIES AND LIABILITIES OF TRUSTEES
11. Trustee to execute trust
12. Trustee to inform himself of state of trust-property
13. Trustee to protect title to trust-property
14. Trustee not to set up title adverse to beneficiary
15. Care required from trustee
16. Conversion of perishable property
17. Trustee to be impartial
18. Trustee to prevent waste
19. Accounts and information
20. Investment of trust-money
20A. Power to purchase redeemable stock at a premium
21. Mortgage of land Pledged to government under Act 26 of 1871-Deposit in government savings bank
22. Sale by trustee directed to sell within specified time
23. Liability for breach of trust
24. No set-off allowed to trustee
25. Non-liability for predecessor’s default
26. Non-liability for co-trustee’s default
27. Several liability of co-trustees
28. Non-liability of trustee paying without notice of transfer by beneficiary
29. Liability of trustee where beneficiary’s interest is forfeited to the government
30. Indemnity of trustees
CHAPTER IV : OF THE RIGHTS AND POWERS OF TRUSTEES
31. Right to title deed
32. Right to reimbursement of expenses
33. Right to indemnity from gainer by breach of trust
34. Right to apply to court for opinion in management of trust-property
35. Right to settlement of accounts
36. General authority of trustee
37. Power to sell in lots and either by public auction or private contract
38. Power to sell under special conditions-Power to buy-in and re-sell
39. Power to convey
40. Power to vary investments
41. Power to apply property of minors, etc. for their maintenance, etc.
42. Power to give receipts
43. Power to compound, etc.
44. Power to several trustees of whom one disclaims or dies
45. Suspension of trustee’s powers by decree
CHAPTER V : OF THE DISABILITIES OF TRUSTEES
46. Trustee cannot renounce after acceptance
47. Trustee cannot delegate
48. Co-trustees cannot act singly
49. Control of discretionary power
50. Trustee may not charge for services
51. Trustee may not use trust property for his own profit
52. Trustee for sale or his agent may not buy
53. Trustee may not buy beneficiary’s interest without permission
54. Co-trustees may not lend to one of themselves
CHAPTER VI : OF THE RIGHTS AND LIABILITIES OF THE BENEFICIARY
55. Rights to rents and profits
56. Right to specific execution
57. Right to inspect and take copies of instrument of trust, accounts, etc.
58. Right to transfer beneficial interest
59. Right to sue for execution of trust
60. Right to proper trustees
61. Right to compel to any act of duty
62. Wrongful purchase by trustee
63. Following trust property-into the hands of third persons; into that into which it has been converted
64. Saving of rights of certain transferees
65. Acquisition by trustee of trust-property wrongfully converted
66. Right in case of blended property
67. Wrongful employment by partner-trustee of trust-property for partnership purposes
68. Liability of beneficiary joining in breach of trust
69. Rights and liabilities of beneficiary’s transferee
CHAPTER VII : OF VACATING THE OFFICE OF TRUSTEE
70. Office how vacated
71. Discharge of trustee
72. Petition to be discharged from trust
73. Appointment of new trustees on death, etc.
74. Appointment by court
75. Vesting of trust-property in new trustees
76. Survival of trust
CHAPTER VIII : OF THE EXTINCTION OF TRUSTS
77. Trust how extinguished
78. Revocation of trust
79. Revocation not to defeat what trustees have duly done
CHAPTER IX : OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTS
80. Where obligation in nature of trust is created
81. Where it does not appear that transferor intended to dispose of beneficial interest
82. Transfer to one for consideration paid by another]
83. Trust incapable of execution or executed without exhausting trust-property
84. Transfer for illegal purpose
85. Bequest for illegal purpose
86. Transfer pursuant to rescindable contract
87. Debtor becoming creditor’s representative
88. Advantage gained by fiduciary
89. Advantage gained by exercise of undue influence
90. Advantage gained by qualified owner
91. Property acquired with notice of existing contract
92. Purchase by person contracting to buy property to be held on trust
93. Advantage secretly gained by one of several compounding creditors
94. Constructive trusts in cases not expressly provided for
95. Obligor’s duties, liabilities and disabilities
96. Saving of rights of bona fide purchasers
THE SCHEDULE
Foot NotesAn Act to define and amend the law relating to private trusts and trustees.
Whereas it is expedient to define and amend the law relating to private trusts and trustees; it is hereby enacted as follows: -

CHAPTER I : PRELIMINARY

1. Short title and commencement
This Act may be called the Indian Trusts Act, 1882; and it shall come into force on the first day of March, 1882.
Local extent, Saving: It extends to the whole of India except the State of Jammu and Kashmir and the Andaman and Nicobar Islands; but the Central Government may, from time to time, by notification in the Official Gazette, extend it to the Andaman and Nicobar Islands or to any part thereof. But nothing herein contained affects the rules of Mohamedan law as to waqf, or the mutual relations of the members of an undivided family as determined by any customary, or personal law, or applies to public or private religious or charitable endowments or to trusts to distribute prizes taken in war among the captors; and nothing in the Second Chapter of this Act applies to trusts created before the said day.
2. Repeal of enactments
The statutes and Acts mentioned in the Schedule hereto annexed shall, to the extent mentioned in the said Schedule, be repealed, in the territories to which this Act for the time being extends.
3. Interpretation clause- “trust”
A “trust” is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner:
“author of the trust”: “trustee”: “beneficiary”: “trust property”: “beneficial interest”: “instrument of trust”:
the person who reposes or declares the confidence is called the “author of the trust”: the person who accepts the confidence is called the “trustee”: the person for whose benefit the confidence is accepted is called the “beneficiary”: the subject-matter of the trust is called “trust-property” or “trust-money”: the “beneficial interest” or “interest” of the beneficiary is his right against the trustee as owner of the trust-property; and the instrument, if any, by which the trust is declared is called the “instrument of trust”;
“breach of trust”: a breach of any duty imposed on a trustee, as such, by any law for the time being in force, is called a “breach of trust”.
“registered”: and in this Act, unless there be something repugnant in the subject or context, “registered” means registered under the law for the registration of documents for the time being in force.
“notice”: a person is said to have “notice” of a fact either when he actually knows that fact or when, but for wilful abstention from inquiry or gross negligence, he would have known it, or when information of the fact is given to or obtained by his agent, under the circumstances mentioned in the Indian Contract Act, 1872 (9 of 1872), section 229.
Expressions used herein and defined in the Indian Contract Act, 1872 (expressions defined in Act 9 of 1872), shall be deemed to have the meanings respectively attributed to them by that Act.

CHAPTER II : OF THE CREATION OF TRUSTS

4. Lawful purpose
A trust may be created for any lawful purpose. The purpose of a trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it would defeat the provisions of any law, or (c) is fraudulent, or (d) involves or implies injury to the person or property of another, or (e) the court regards it as immoral or opposed to public policy.
Every trust of which the purpose is unlawful is void. And where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes, cannot be separated, the whole trust is void.
Explanation: In this section, the expression “law” includes, where the trust property is immovable and situate in a foreign country, the law of such country.
Illustrations
(a) A conveys property to B in trust to apply the profits to the nurture of female foundlings to be trained up as prostitutes. The trust is void.
(b) A bequeaths property to B in trust to employ it in carrying on a smuggling business, and out of the profits thereof to support A’s children. The trust is void.
(c) A, while in insolvent circumstances, transfers property to B in trust for A during his life, and after his death for B. A is declared an insolvent. The trust for A is invalid as against his creditors.
5. Trust of immovable property
No trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered or by the will of the author of the trust or of the trustee.
Trust, of movable property: No trust in relation to movable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee.
These rules do not apply where they would operate so as to effectuate a fraud.
6. Creation of trust
Subject to the provisions of section 5, a trust is created when the author of the trust indicates with reasonable certainty by any words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transferred the trust-property to the trustee.
Illustrations
(a) A bequeaths certain property to B, “having the fullest confidence that he will dispose of it for the benefit of C”. This creates a trust so far as regards A and C.
(b) A bequeaths certain property to B, “hoping he will continue it in the family”. This does not create a trust, as the beneficiary is not indicated with reasonable certainty.
(c) A bequeaths certain property to B, requesting him to distribute it amongst such members of C’s family as B should think most deserving. This does not create a trust, for the beneficiaries are not indicated with reasonable certainty.
(d) A bequeaths certain property to B, desiring him to divide the bulk of it among C’s children. This does not create a trust, for the trust-property is not indicated with sufficient certainty.
(e) A bequeaths a ship and stock-in-trade to B, on condition that he pays A’s debts and legacy to C. This is a condition, not a trust for A’s creditors and C.
7. Who may create trusts
A trust may be created-
(a) by every person competent to contract, and
(b) with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor,
but subject in each case to the law for the time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust property.
8. Subject matter of trust
The subject-matter of a trust must be property transferable to the beneficiary. It must not be merely beneficial interest under a subsisting trust.
9. Who may be beneficiary
Every person capable of holding property may be a beneficiary.
Disclaimer by beneficiary : A proposed beneficiary may renounce his interest under the trust by disclaimer addressed to the trustee, or by setting up, with notice of the trust, a claim inconsistent therewith.
10. Who may be trustee
Every person capable of holding property may be a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract.
No one bound to accept trust : No one is bound to accept a trust.
Acceptance of trust: A trust is accepted by any words or acts of the trustee indicating with reasonable certainty such acceptance.
Disclaimer of trust : Instead of accepting a trust, the intended trustee may, within a reasonable period, disclaim it, and such disclaimer shall prevent the trust-property from vesting in him.
A disclaimer by one of two or more co-trustees vests the trust-property in the other or others, and makes him or them sole trustee or trustees from the date of the creation of the trust.
Illustrations
(a) A bequeaths certain property to B and C, his executors, as trustees for D. B and C prove A’s will. This is in itself an acceptance of the trust, and B and C hold the property in trust for D.
(b) A transfers certain property to B in trust to sell it and to pay out of the proceeds A’s debts. B accepts the trust and sells the property. So far as regards B, a trust of the proceeds is created for A’s creditors.
(c) A bequeaths a lakh of rupees to B upon certain trusts and appoints him his executor. B severs the lakh from the general assets and appropriates it to the specific purpose. This is an acceptance of the trust.

CHAPTER III : OF THE DUTIES AND LIABILITIES OF TRUSTEES

11. Trustee to execute trust
The trustee is bound to fulfil the purpose of the trust, and to obey the directions of the author of the trust given at the time of its creation, except as modified by the consent of all the beneficiaries being competent to contract.
Where the beneficiary is incompetent to contract, his consent may, for the purposes of this section, be given by a principal civil court of original jurisdiction.
Nothing in this section shall be deemed to require a trustee to obey any direction when to do so would be impracticable, illegal or manifestly injurious to the beneficiaries.
Explanation : Unless a contrary intention be expressed, the purpose of a trust for the payment of debts shall be deemed to be (a) to pay only the debts of the author of the trust existing and recoverable at the date of the instrument of trust, or, when such instrument is a will, at the date of his death, and (b) in the case of debts not bearing interest, to make such payment without interest.
Illustrations
(a) A, a trustee, is simply authorised to sell certain land by public auction. He cannot sell the land by private contract.
(b) A, a trustee of certain land for X, Y and Z, is authorized to sell the land to B for a specified sum. X, Y and Z, being competent to contract, consent that A may sell the land to C for a less sum. A may sell the land accordingly.
(c) A, a trustee for B and her children, is directed by the author of the trust to lend, on B’s request, trust-property to B’s husband C, on the security of his bond. C becomes insolvent and B requests A to make the loan. A may refuse to make it.
12. Trustee to inform himself of state of trust-property
A trustee is bound to acquaint himself, as soon as possible, with the nature and circumstances of the trust-property; to obtain, where necessary, a transfer of the trust property to himself; and (subject to the provisions of the instrument of trust) to get in trust-moneys invested on insufficient or hazardous security.
Illustrations
(a) The trust-property is a debt outstanding on personal security. The instrument of trust gives the trustee no discretionary power to leave the debt so outstanding. The trustee’s duty is to recover the debt without unnecessary delay.
(b) The trust-property is money in the hands of one of two co-trustees. No discretionary power is given by the instrument of trust. The other co-trustee must not allow the former to retain the money for a longer period than the circumstances of the case required.
13. Trustee to protect title to trust-property
A trustee is bound to maintain and defend all such suits, and (subject to the provisions of the instrument of trust) to take such other steps as, regard being had to the nature and amount or value of the trust-property, may be reasonably requisite for the preservation of the trust-property and the assertion or protection of the title thereto.
Illustration
The trust-property is immovable property which has been given to the author of the trust by an unregistered instrument. Subject to the provisions of the Indian Registration Act, 1877 (3 of 1877), the trustee’s duty is to cause the instrument to be registered.
14. Trustee not to set up title adverse to beneficiary
The trustee must not for himself or another set up or aid any title to the trust-property adverse to the interest of the beneficiary.
15. Care required from trustee
A trustee is bound to deal with the trust-property as carefully as a man of ordinary prudence would deal with such property if it were his own; and, in the absence of a contract to the contrary, a trustee so dealing is not responsible for the loss, destruction or deterioration of the trust-property.
Illustrations
(a) A, living in Calcutta, is a trustee for B, living in Bombay. A remits trust funds to B by bills drawn by a person of undoubted credit in favour of the trustee as such, and payable at Bombay. The bills are dishonoured. A is not bound to make good the loss.
(b) A, trustee of leasehold property, directs the tenant to pay the rents on account of the trust to a banker, B, then in credit. The rents are accordingly paid to B, and A leaves the money with B only till wanted. Before the money is drawn out, B becomes insolvent. A, having had no reason to believe that B was in insolvent circumstances, is not bound to make good the loss.
(c) A, a trustee of two debts for B, releases one and compounds the other, in good faith, and reasonably believing that it is for B’s interest to do so. A is not bound to make good any loss caused thereby to B.
(d) A, a trustee directed to sell the trust-property by auction, sells the same, but does not advertise the sale and otherwise fails in reasonable diligence in inviting competition. A is bound to make good the loss caused thereby to the beneficiary.
(e) A, a trustee for B, in execution of his trust, sells the trust-property, but from want of due diligence on his part fails to receive part of the purchase money. A is bound to make good the loss thereby caused to B.
(f) A, a trustee for B of a policy of insurance, has funds in hand for payment of the premiums. A neglects to pay the premiums, and the policy is consequently forfeited. A is bound to make good the loss to B.
(g) A bequeaths certain moneys to B and C as trustees, and authorizes them to continue trust-moneys upon the personal security of a certain firm in which A had himself invested them. A dies, and a change takes place in the firm. B and C must not permit the moneys to remain upon the personal security of the new firm.
(h) A, a trustee for B, allows the trust to be executed solely by his co-trustee C. C misapplies the trust-property. A is personally answerable for the loss resulting to B.
16. Conversion of perishable property
Where the trust is created for the benefit of several persons in succession, and the trust property is of a wasting nature or a future or reversionary interest, the trustee is bound, unless an intention to the contrary may be inferred from the instrument of trust, to convert the property into property of a permanent and immediately profitable character.
Illustrations
(a) A bequeaths to B all his property in trust for C during his life, and on his death for D, and on D’s death for E. A’s property consists of three leasehold houses, and there is nothing in A’s will to show that he intended the houses to be enjoyed in specie. B should sell the houses, and invest the proceeds in accordance with section 20.
(b) A bequeaths to B his three leasehold houses in Calcutta and all the furniture therein in trust for C during his life, and on his death for D, and on D’s death for E. Here an intention that the houses and furniture should be enjoyed in specie appears clearly, and B should not sell them.
17. Trustee to be impartial
Where there are more beneficiaries than one, the trustee is bound to be impartial, and must not execute the trust for the advantage of one at the expense of another.
Where the trustee has a discretionary power, nothing in this section shall be deemed to authorize the court to control the exercise reasonably and in good faith of such discretion.
Illustration
A, a trustee for B, C and D, is empowered to choose between several specified modes of investing the trust-property. A in good faith chooses one of these modes. The court will not interfere, although the result of the choice may be to vary the relative rights of B, C and D.
18. Trustee to prevent waste
Where the trust is created for the benefit of several persons in succession and one of them is in possession of the trust-property, if he commits, or threatens to commit, any act which is destructive or permanently injurious thereto, the trustee is bound to take measures to prevent such act.
19. Accounts and information
A trustee is bound (a) to keep clear and accurate accounts of the trust-property, and (b) at all reasonable times, at the request of the beneficiary, to furnish him with full and accurate information as to the amount and state of the trust-property.
20. Investment of trust-money
Where the trust-property consists of money and cannot be applied immediately or at an early date to the purposes of the trust, the trustee is bound (subject to any direction contained in the instrument of trust) to invest the money on the following securities, and on no others:
(a) in promissory notes, debentures, stock or other securities of any State Government or of the Central Government, or of the United Kingdom of Great Britain and Ireland:
PROVIDED that securities, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such government, shall be deemed, for the purposes of this clause, to be securities of such government;
(b) in bonds, debentures and annuities charged or secured by the Parliament of the United Kingdom before the fifteenth day of August, 1947 on the revenues of India or of the Governor General in Council or of any province:
PROVIDED that, after the fifteenth day of February, 1916, no money shall be invested in any such annuity being a terminable annuity unless a sinking fund has been established in connection with such annuity; but nothing in this proviso shall apply to investments made before the date aforesaid.
(bb) in India three and a half per cent stock, India three per cent stock, India two and a half per cent stock or any other capital stock which before the 15th day of August, 1947, was issued by the Secretary of State for India in Council under the authority of an Act of Parliament of the United kingdom and charged on the revenues of India or which was issued by the Secretary of State on behalf of the Governor-General in Council under the provisions of Part XIII of the Government of India Act, 1935;
(c) in stock or debentures of, or shares in, Railway or other companies the interest whereon shall have been guaranteed by the Secretary of State for India in Council or by the Central Government or in debentures of the Bombay Provincial Co-operative Bank Limited, the interest whereon shall have been guaranteed, by the Secretary of State for India in Council or the State Government of Bombay;
(d) in debentures or other securities for money issued, under the authority of any Central Act or Provincial Act or State Act, by or on behalf of any municipal body, port trust or city improvement trust in any Presidency-town, or in Rangoon town, or by or on behalf of the trustees of the port of Karachi:
PROVIDED that after the 31st day of March, 1948, no money shall be invested in any securities issued by or on behalf of a municipal body, port trust or city improvement trust in Rangoon town, or by or on behalf of the trustees of the port of Karachi ;
(e) On a first mortgage of immovable property situate in any part of the territories to which this Act extends 1[* * *]:
PROVIDED that the property is not a leasehold for a term of years and that the value of the property exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the mortgage-money;
2[(ee) in units issued by the Unit Trust of India under any unit scheme made under section 21 of the Unit Trust of India Act, 1963 (52 of 1963); or]
(f) on any other security expressly authorized by the instrument of trust, 2[or by the Central Government by the notification in the Official Gazette] or by any rule which the High Court may from time to time prescribe in this behalf:
PROVIDED that, where there is a person competent to contract and entitled in possession to receive the income of the trust-property for his life, or for any greater estate, no investment on any security mentioned or referred to in clauses (d), (e) and (f) shall be made without his consent in writing.
20A. Power to purchase redeemable stock at a premium
(1) A trustee may invest in any of the securities mentioned or referred to in section 20, notwithstanding that the same may be redeemable and that the price exceeds the redemption value:
PROVIDED that a trustee may not purchase at a price exceeding its redemption value any security mentioned or referred to in clauses (c) and (d) of section 20 which is liable to be redeemed within fifteen years of the date of purchase at par or at some other fixed rate, or purchase any such security as is mentioned or referred to in the said clauses which is liable to be redeemed at par or at some other fixed rate at a price exceeding fifteen per centum above par or such other fixed rate.
(2) A trustee may retain until redemption any redeemable stock, fund or security which may have been purchased in accordance with this section.
21. Mortgage of land Pledged to government under Act 26 of 1871- Deposit in government savings bank
Nothing in section 20 shall apply to investments made before this Act comes into force, or shall be deemed to Preclude an investment on a mortgage of immovable property already pledged as security for an advance under the Land Improvement Act, 1871 (26 of 1871), or in case the trust-money does not exceed three thousand rupees, a deposit thereof in a government savings bank.
22. Sale by trustee directed to sell within specified time
Where a trustee directed to sell within a specified time extends such time, the burden of proving, as between himself and the beneficiary, that the latter is not prejudiced by the extension lies upon the trustee, unless the extension has been authorised by a principal civil court of original jurisdiction.
Illustration
A bequeaths property to B, directing him with all convenient speed and within five years to sell it, and apply the proceeds for the benefit of C. In the exercise of reasonable discretion, B postpones the sale for six years. The sale is not thereby rendered invalid, but C, alleging that he has been injured by the postponement, institutes a suit against B to obtain compensation. In such suit the burden of proving that C has not been injured lies on B.
23. Liability for breach of trust
Where the trustee commits a breach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless the beneficiary has by fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his rights as against the trustee.
A trustee committing a breach of trust is not liable to pay interest except in the following cases :-
(a) where he has actually received interest;
(b) where the breach consists in unreasonable delay in paying trust-money to the beneficiary;
(c) where the trustee ought to have received interest, but has not done so;
(d) where he may be fairly presumed to have received interest.
He is liable, in case (a), to account for the interest actually received, and, in case (b), (c) and (d), to account for simple interest at the rate of six per cent per annum, unless the court otherwise directs;
(e) where the breach consists in failure to invest trust-money and to accumulate the interest or dividends thereon, he is liable to account for compound interest (with half-yearly rests) at the same rate;
(f) where the breach consists in the employment of trust-property or the proceeds thereof in trade or business he is liable to account, at the option of the beneficiary, either for compound interest (with half-yearly rests) at the same rate, or for the net profits made by such employment.
Illustrations
(a) A trustee improperly leaves trust-property outstanding, and it is consequently lost; he is liable to make good the property lost, but he is not liable to pay interest thereon.
(b) A bequeaths a house to B in trust to sell it and pay the proceeds to C. B neglects to sell the house for a great length of time, whereby the house is deteriorated and its market price falls. B is answerable to C for the loss.
(c) A trustee is guilty of unreasonable delay in investing trust money in accordance with section 20, or in paying it to the beneficiary. The trustee is liable to pay interest thereon for the period of the delay.
(d) The duty of the trustee is to invest trust-money in any of the securities mentioned in section 20, clauses (a), (b), (c) or (d). Instead of so doing, he retains the money in his hands. He is liable, at the option of the beneficiary, to be charged either with the amount of the principal money and interest, or with the amount of such securities as he might have purchased with the trust-money when the investment should have been made, and the intermediate dividends and interest thereon.
(e) The instrument of trust directs the trustee to invest trust-money either in any of such securities or on mortgage of immovable property. The trustee does neither. He is liable for the principal money and interest.
(f) The instrument of trust directs the trustee to invest trust-money in any of such securities and to accumulate the dividends thereon. The trustee disregards the direction. He is liable, at the option of the beneficiary, to be charged either with the amount of the principal money and compound interest, or with the amount of such securities as he might have purchased with the trust-money when the investment should have been made, together with the amount of the accumulation which would have arisen from a proper investment of the intermediate dividends.
(g) Trust-property is invested in one of the securities mentioned in section 20, clauses (a), (b), (c) or (d). The trustee sells such security for some purpose not authorized by the terms of the instrument of trust. He is liable, at the option of the beneficiary, either to replace the security with the intermediate dividends and interest thereon, or to account for the proceeds of the sale with interest thereon.
(h) The trust-property consists of land. The trustee sells the land to a purchaser for a consideration without notice of the trust. The trustee is liable, at the option of the beneficiary, to purchase other land of equal value to be settled upon the like trust, or to be charged with the proceeds of the said with interest.
24. No set-off allowed to trustee
A trustee who is liable for a loss occasioned by a breach of trust in respect of one portion of the trust-Property cannot set-off against his liability a gain which has accrued to another portion of the trust property through another and distinct breach of trust.
25. Non-liability for predecessor’s default

Where a trustee succeeds another, he is not, as such, liable for the acts or defaults of his predecessor.
26. Non-liability for co-trustee’s default
Subject to the provisions of sections 13 and 15, one trustee is not, as such, liable for a breach of trust committed by his co-trustee:
PROVIDED that, in, the absence of an express declaration to the contrary in the instrument of trust, a trustee is so liable-
(a) where he has delivered trust-property to his co-trustee without seeing to its proper application;
(b) where he allows his co-trustee to receive trust-property and fails to make due enquiry as to the co-trustee’s dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably require;
(c) where he becomes aware of a breach of trust committed or intended by his co-trustee, and either actively conceals it or does not within a reasonable time take proper steps to protect the beneficiary’s interest.
Joining in receipt for conformity
A co-trustee who joins in signing a receipt for trust-property and proves that he has not received the same is not answerable, by reason of such signature only, for loss or mis-application of the property by his co-trustee.
Illustration
A bequeaths certain property to B and C, and directs them to sell it and invest the proceeds for the benefit of D. B and C accordingly sell the property, and the purchase money is received by B and retained in his hands. C pays no attention to the matter for two years and then calls on B to make the investment. B is unable to do so, becomes insolvent, and the purchase-money is lost. C may be compelled to make good the amount.
27. Several liability of co-trustees
Where co-trustees jointly commit a breach of trust, or where one of them by his neglect enables the other to commit a breach of trust, each is liable to the beneficiary for the whole of the loss occasioned by such breach.
Contribution as between co-trustees
But as between the trustees themselves, if one be less guilty than another and has had to refund the loss, the former may compel the latter, or his legal representative to the extent of the assets he has received, to make good such loss; and if all be equally guilty, any one or more of the trustees who has had to refund the loss may compel the others to contribute.
Nothing in this section shall be deemed to authorize a trustee who has been guilty of fraud to institute a suit to compel contribution.
28. Non-liability of trustee paying without notice of transfer by beneficiary
When any beneficiary’s interest becomes vested in another person, and the trustee, not having notice of the vesting, pays or delivers trust-property to the person who would have been entitled thereto in the absence of such vesting, the trustee is not liable for the property so paid or delivered.
29. Liability of trustee where beneficiary’s interest is forfeited to the government
When the beneficiary’s interest is forfeited or awarded by legal adjudication to the government, the trustee is bound to hold the trust-property to the extent of such interest for the benefit of such person in such manner as the State Government may direct in this behalf.
30. Indemnity of trustees
Subject to the provisions of the instrument of trust and of sections 23 and 26, trustees shall be respectively chargeable only for such moneys, stocks, funds and securities as they respectively actually receive, and shall not be answerable the one for the other of them, nor for any banker, broker or other person in whose hands any trust-property may be placed, nor for the insufficiency or deficiency of any stocks, funds or securities, nor otherwise for involuntary losses.

CHAPTER IV : OF THE RIGHTS AND POWERS OF TRUSTEES

31. Right to title deed
A trustee is entitled to have in his possession the instrument of trust and all the documents of title (if any) relating solely to the trust-property.
32. Right to reimbursement of expenses
Every trustee may reimburse himself, or pay or discharge out of the trust-property, all expenses properly incurred in or about the execution of the trust, or the realization, preservation or benefit of the trust-property, or the protection or support of the beneficiary.
If he pays such expenses out of his own pocket he has a first charge upon the trust-property for such expenses and interest thereon; but such charge (unless the expenses have been incurred with the sanction of a principal civil court of original jurisdiction) shall be enforced only by prohibiting any disposition of the trust-property without previous payment of such expenses and interest.
If the trust property fail, the trustee is entitled to recover from the beneficiary personally on whose behalf he acted, and at whose request, expressed or implied, he made the payment, the amount of such expenses.
Right to be recouped for erroneous over-payment
Where a trustee has by mistake made an over-payment to the beneficiary, he may reimburse the trust-property out of the beneficiary’s interest. If such interest fail, the trustee is entitled to recover from the beneficiary personally the amount of such over-payment.
33. Right to indemnity from gainer by breach of trust
A person other than a trustee who has gained an advantage from a breach of trust must indemnify the trustee to the extent of the amount actually received by such person under the breach; and where he is a beneficiary the trustee has a charge on his interest for such amount.
Nothing in this section shall be deemed to entitle a trustee to be indemnified who has, in committing the breach of trust, been guilty of fraud.
34. Right to apply to court for opinion in management of trust-property
Any trustee may, without instituting a suit, apply by petition to a principal civil court of original jurisdiction for its opinion, advice or direction on any present questions respecting the management or administration of the trust-property other than questions of detail, difficulty or importance, not proper in the opinion of the court for summary disposal.
A copy of such petition shall be served upon, and the hearing thereof may be attended by, such of the persons interested in the application as the court thinks fit.
The trustee stating in good faith the facts in such petition, and acting upon the opinion, advice or direction given by the court shall be deemed, so far as regards his own responsibility, to have discharged his duty as such trustee in the subject-matter of the application.
The costs of every application under this section shall be in the discretion of the court to which it is made.
35. Right to settlement of accounts
When the duties of a trustee, as such, are completed, he is entitled to have the accounts of his administration of the trust-property examined and settled; and, where nothing is due to the beneficiary under the trust, to an acknowledgement in writing to that effect.
36. General authority of trustee
In addition to the powers expressly conferred by this Act and by the instrument of trust, and subject to the restriction, if any, contained in such instrument, and to the provisions of section 17, a trustee may do all acts which are reasonable and proper for the realization, protection or benefit of the trust-property, and for the protection or support of a beneficiary who is not competent to contract.
Except with the permission of a principal civil court of original jurisdiction, no trustee shall lease trust-property for a term exceeding twenty-one years from the date of executing the lease, nor without reserving the best yearly rent than can be reasonably obtained.
37. Power to sell in lots and either by public auction or private contract
Where the trustee is empowered to sell any trust-property, he may sell the same subject to prior charges or not, and either together or in lots, by public auction or private contract, and either at one time or at several times, unless the instrument of trust otherwise directs.
38. Power to sell under special conditions-Power to buy-in and re-sell
The trustee making any such sale may insert such reasonable stipulations either as to title or evidence of title, or otherwise, in any conditions of sale or contract for sale, as he thinks fit; and may also buy-in the property or any part thereof at any sale by auction, and rescind or vary any contract for sale, and re-sell the property so bought in, or as to which the contract is so rescinded, without being responsible to the beneficiary for any loss occasioned thereby.
Time Allowed selling trust-property
Where a trustee is directed to sell trust-property or to invest trust-money in the purchase of property, he may exercise a reasonable discretion as to the time of effecting the sale or purchase.
Illustrations
(a) A bequeaths property to B, directing him to sell it with all convenient speed and pay the proceeds to C. This does not render an immediate sale imperative.
(b) A bequeaths property to B, directing him to sell it at such time and in such manner as he shall think fit and invest the proceeds for the benefit of C. This does not authorize B, as between him and C, to postpone the sale to an indefinite period.
39. Power to convey
For the purpose of completing any such sale, the trustee shall have power to convey or otherwise dispose of the property sold in such manner as may be necessary.
40. Power to vary investments
A trustee may, at his discretion, call in any trust-property invested in any security and invest the same on any of the securities mentioned or referred to in section 20, and from time to time vary any such investments for others of the same nature:
PROVIDED that, where there is a person competent to contract and entitled at the time to receive the income of the trust property for his life, or for any greater estate, no such change of investment shall be made without his consent in writing.
41. Power to apply property of minors, etc. for their maintenance, etc.
Where any property is held by a trustee in trust for a minor, such trustee may, at his discretion, pay to the guardians (if any) of such minor, or otherwise apply for or towards his maintenance or education or advancement in life, or the reasonable expenses of his religious worship, marriage or funeral, the whole or any part of the income to which he may be entitled in respect of such property; and such trustee shall accumulate all the residue of such income by way of compound interest, by investing the same and the resulting income thereof from time to time in any of the securities mentioned or referred to in section 20, for the benefit of the person who shall ultimately become entitled to the property from which such accumulations have arisen:
PROVIDED that such trustee may, at any time, if he thinks fit, apply the whole or any part of such accumulations as if the same were part of the income arising in the then current year.
Where the income of the trust-property is insufficient for the minor’s maintenance or education or advancement in life, or the reasonable expenses of his religious worship, marriage or funeral, the trustee may, with the permission of a principal civil court of original jurisdiction, but not otherwise, apply the whole or any part of such property for or towards such maintenance, education, advancement or expenses.
Nothing in this section shall be deemed to affect the provisions of any local law for the time being in force relating to the persons and property of minors.
42. Power to give receipts
Any trustees or trustee may give a receipt in writing for any money, securities or other movable property payable, transferable or deliverable to them or him by reason, or in the exercise of any trust or power; and, in the absence of fraud, such receipt shall discharge the person paying, transferring or delivering the same therefrom, and from seeing to the application thereof, or being accountable for any loss or misapplication thereof.
43. Power to compound, etc.
Two or more trustees acting together may; if and as they think fit,-
(a) accept any composition or any security for any debt or for any property claimed;
(b) allow any time for payment of any debt;
(c) compromise, compound, abandon, submit to arbitration or otherwise settle any debt, account, claim or thing whatever relating to the trust; and
(d) for any of those purposes, enter into, give, execute and do such agreements, instruments of composition or arrangement, releases and other things as to them seem expedient, without being responsible for any loss occasioned by any act or thing so done by them in good faith.
The powers conferred by this section on two or more trustees acting together may be exercised by a sole acting trustee when by the instrument of trust, if any, a sole trustee is authorized to execute the trusts and powers thereof.
This section applies only if and as far as a contrary intention is not expressed in the instrument of trust, if any, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
This section applies only to trusts created after this Act comes into force.
44. Power to several trustees of whom one disclaims or dies
When an authority to deal with the trust-property is given to several trustees and one of them disclaims or dies, the authority may be exercised by the continuing trustees, unless from the terms of the instrument of trust it is apparent that the authority is to be exercised by a number in excess of the number of the remaining trustees.
45. Suspension of trustee’s powers by decree
Where a decree has been made in a suit for the execution of a trust, the trustee must not exercise any of his powers except in conformity with such decree, or with the sanction of the court by which the decree has been made, or, where an appeal against the decree is pending, of the appellate court.

CHAPTER V : OF THE DISABILITIES OF TRUSTEES

46. Trustee cannot renounce after acceptance
A trustee who has accepted the trust cannot afterwards renounce it except (a) with the permission of a principal civil court of original jurisdiction, or (b) if the beneficiary is competent to contract, with his consent, or (c) by virtue of a special power in the instrument of trust.
47. Trustee cannot delegate
A trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger, unless (a) the instrument of trust so provides, or (b) the delegation is in the regular course of business, or (c) the delegation is necessary, or (d) the beneficiary, being competent to contract, consents to the delegation.
Explanation: The appointment of an attorney or proxy to do an act merely ministerial and involving no independent discretion is not a delegation within the meaning of this section.
Illustrations
(a) A bequeaths certain property to B and C on certain trusts to be executed by them or the survivor of them or the assigns of such survivor. B dies. C may bequeath the trust-property to D and E upon the trusts of A’s will.
(b) A is a trustee of certain property with power to sell the same. A may employ an auctioneer to effect the sale.
(c) A bequeaths to B fifty houses let at monthly rents in trust to collect the rents and pay them to C. B may employ a proper person to collect these rents.
48. Co-trustees cannot act singly
When there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides.
49. Control of discretionary power
Where a discretionary power conferred on a trustee is not exercised reasonably and in good faith, such power may be controlled by a principal civil court of original jurisdiction.
50. Trustee may not charge for services
In the absence of express directions to the contrary contained in the instrument of trust or of a contract to the contrary entered into with the beneficiary or the court at the time of accepting the trust, a trustee has no right to remuneration for his trouble, skill and loss of time in executing the trust.
Nothing in this section applies to any Official Trustee, Administrator General, Public Curator, or person holding a certificate of administration.
51. Trustee may not use trust property for his own profit
A trustee may not use or deal with the trust-property for his own profit or for any other purpose unconnected with the trust.
52. Trustee for sale or his agent may not buy
No trustee whose duty it is to sell trust-property, and no agent employed by such trustee for the purpose of the sale, may, directly or indirectly, buy the same or any interest therein, on his own account or as agent for a third person.
53. Trustee may not buy beneficiary’s interest without permission
Not trustee, and no person who has recently ceased to be a trustee, may, without the permission of a principal civil court of original jurisdiction, buy or become mortgagee or lessee of the trust-property or any part thereof; and such permission shall not be given unless the proposed purchase, mortgage or lease is manifestly for the advantage of the beneficiary.
Trustee for purchase
And no trustee whose duty it is to buy or to obtain a mortgage or lease of particular property for the beneficiary may buy it, or any part thereof, or obtain a mortgage or lease of it, or any part thereof, for himself.
54. Co-trustees may not lend to one of themselves
A trustee or co-trustee whose duty it is to invest trust-money on mortgage or personal security must not invest it on a mortgage by, or on the personal security of, himself or one of his co-trustees.

CHAPTER VI : OF THE RIGHTS AND LIABILITIES OF THE BENEFICIARY

55. Rights to rents and profits
The beneficiary has, subject to the provisions of the instrument of trust, a right to the rents and profits of the trust property.
56. Right to specific execution
The beneficiary is entitled to have the intention of the author of the trust specifically executed to the extent of the beneficiary’s interest;
Right to transfer of possession
and, where there is only one beneficiary and he is competent to contract, or where there are several beneficiaries and they are competent to contract and all of one mind, he or they may require the trustee to transfer the trust-property to him or them, or to such person as he or they may direct.
When property has been transferred or bequeathed for the benefit of a married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in the second clause of this section applies to such property during her marriage.
Illustrations
(a) Certain government securities are given to trustees upon trust to accumulate the interest until A attains the age of 24, and then to transfer the gross amount to him. A on attaining majority may, as the person exclusively interested in the trust-property, require the trustees to transfer it immediately to him.
(b) A bequeaths Rs. 10,000 to trustees upon trust to purchase an annuity for B, who has attained his majority and is otherwise competent to contract, B may claim the Rs. 10,000.
(c) A transfers certain property to B and directs him to sell or invest it for the benefit of C, who is competent to contract. C may elect to take the property in its original character.
57. Right to inspect and take copies of instrument of trust, accounts, etc.
The beneficiary has a right, as against the trustee and all persons claiming under him with notice of the trust, to inspect and take copies of the instrument of trust, the documents of title relating solely to the trust-property, the accounts of the trust-property and the vouchers (if any) by which they are supported, and the cases submitted and opinions taken by the trustee for his guidance in the discharge of his duty.
58. Right to transfer beneficial interest
The beneficiary, if competent to contract, may transfer his interest, but subject to the law for the time being in force as to the circumstances and extent in and to which he may dispose of such interest:
PROVIDED that when property is transferred or bequeathed for the benefit of a married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in this section shall authorize her to transfer such interest during her marriage.
59. Right to sue for execution of trust
Where no trustees are appointed or all the trustees die, disclaim, or are discharged, or where for any other reason, the execution of a trust by the trustee is or becomes impracticable, the beneficiary may institute a suit for the execution of the trust, and the trust shall, so far as may be possible, be executed by the court until the appointment of a trustee or new trustee.
60. Right to proper trustees
The beneficiary has a right (subject to the provisions of the instrument of trust) that the trust-property shall be properly protected and held and administered by proper persons and by a proper number of such persons.
Explanation I: The following are not proper persons within the meaning of this section:
A person domiciled abroad: an alien enemy: a person having an interest inconsistent with that of the beneficiary : a person in insolvent circumstances; and, unless the personal law of the beneficiary allows otherwise, a married woman and a minor.
Explanation II: When the administration of the trust involves the receipt and custody of money, the number of trustees should be two at least.
Illustrations
(a) A, one of several beneficiaries, proves that B, the trustee, has improperly disposed of part of trust-property, or that the property is in danger from B’s being in insolvent circumstances, or that he is incapacitated from acting as trustee. A may obtain a receiver of the trust-property.
(b) A bequeaths certain jewels to B in trust for C. B dies during A’s lifetime; then A dies; C is entitled to have the property conveyed to a trustee for him.
(c) A conveys certain property to four trustees in trust for B. Three of the trustees die. B may institute a suit to have three new trustees appointed in the place of the deceased trustees.
(d) A conveys certain property to three trustees in trust for B. All the trustees disclaim. B may institute a suit to have three trustees appointed in place of the trustees so disclaiming.
(e) A, a trustee for B, refuses to act, or goes to reside permanently out of India or is declared an insolvent, or compounds with his creditors, or suffers a co-trustee to commit a breach of trust. B may institute a suit to have A removed and a new trustee appointed in his room.
61. Right to compel to any act of duty
The beneficiary has a right that his trustee shall be compelled to perform any particular act of his duty as such, and restrained from committing any contemplated or probable breach of trust.
Illustrations
(a) A contracts with B to pay him monthly Rs. 100 for the benefit of C. B writes and signs a letter declaring that he will hold in trust for C the money so to be paid. A fails to pay the money in accordance with his contract. C may compel B on a proper indemnity to allow C to sue on the contract in B’s name.
(b) A is trustee of certain land, with a power to sell the same and pay the proceeds to B and C equally. A is about to make an improvident sale of the land. B may sue on behalf of himself and C for an injunction to restrain A from making the sale.
62. Wrongful purchase by trustee
Where a trustee has wrongfully bought trust-property, the beneficiary has a right to have the property declared subject to the trust or retransferred by the trustee, if it remains in his hands unsold, or, if it has been bought from him by any person with notice of the trust, by such person. But in such case the beneficiary must repay the purchase-money paid by the trustee, with interest, and such other expenses (if any) as he has properly incurred in the preservation of the property; and the trustee or purchaser must (a) account for the net profits of the property, (b) be charged with an occupation-rent, if he has been in actual possession of the property, and (c) allow the beneficiary to deduct a proportionate part of the purchase-money if the property has been deteriorated by the acts or omissions of the trustee or purchaser.
Nothing in this sections-
(a) impairs the rights of lessees and others, who, before the institution of a suit to have the property declared subject to the trust or retransferred, have contracted in good faith with the trustee or purchaser; or
(b) entitles the beneficiary to have the property declared subject to the trust or retransferred where he, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, ratified the sale to the trustee with full knowledge of the facts of the case and of his rights as against the trustee.
63. Following trust property-into the hands of third persons; into that into which it has been converted
Where trust-property comes into the hands of a third person inconsistently with the trust, the beneficiary may require him to admit formally, or may institute a suit for a declaration, that the property is comprised in the trust.
Where the trustee has disposed of trust-property and the money or other property which he has received therefor can be traced in his hands, or the hands of his legal representative or legatee, the beneficiary has, in respect thereof, rights as nearly as may be the same as his rights in respect of the original trust-property.
Illustrations
(a) A, a trustee for B of Rs. 10,000, wrongfully invests the Rs. 10,000 in the purchase of certain land. B is entitled to the land.
(b) A, a trustee, wrongfully purchased land in his own name, partly with his own money, partly with money subject to a trust for B. B is entitled to a charge on the land for the amount of the trust-money so misemployed.
64. Saving of rights of certain transferees
Nothing in section 63 entitles the beneficiary to any right in respect of property in the hands of-
(a) a transferee in good faith for consideration without having notice of the trust, either when the purchase-money was paid, or when the conveyance was executed, or
(b) a transferee for consideration from such a transferee.
A judgement-creditor of the trustee attaching and purchasing trust-property is not a transferee for consideration within the meaning of this section.
Nothing in section 63 applies to money, currency notes and negotiable instruments in the hands of a bona fide holder to whom they have passed in circulation, or shall be deemed to affect the Indian Contract Act, 1872 (9 of 1872), section 108, or the liability of a person to whom a debt or charge is transferred.
65. Acquisition by trustee of trust-property wrongfully converted
Where a trustee wrongfully sells or otherwise transfers trust-property and afterwards himself becomes the owner of the property, the property again becomes subject to the trust, notwithstanding any want of notice on the part of intervening transferees in good faith for consideration.
66. Right in case of blended property
Where the trustee wrongfully mingles the trust-property with his own, the beneficiary is entitled to a charge on the whole fund for the amount due to him.
67. Wrongful employment by partner-trustee of trust-property for partnership purposes
If a partner, being a trustee, wrongfully employs trust-property in the business or on the account of the partnership, no other partner is liable therefor in his personal capacity to the beneficiaries, unless he had notice of the breach of trust.
The partners having such notice are jointly and severally liable for the breach of trust.
Illustrations
(a) A and B are partners. A dies, having bequeathed all his property to B in trust for Z, and appointed B his sole executor. B, instead of winding up the affairs of the partnership, retains all the assets in the business. Z may compel him, as partner, to account for so much of the profits as are derived from A’s share of the capital. B is also answerable to Z for the improper employment of A’s assets.
(b) A, a trader, bequeaths his property to B in trust for C. Appoints B his sole executor, and dies. B enters into partnership with X and Y in the same trade, and employs A’s assets in the partnership business. B gives an indemnity to X and Y against the claims of C. Here X and Y are jointly liable with B to C as having knowingly become parties to the breach of trust committed by B.
68. Liability of beneficiary joining in breach of trust
Where one of several beneficiaries-
(a) joins in committing breach of trust, or
(b) knowingly obtains any advantage therefrom, without the consent of the other beneficiaries, or
(c) becomes aware of a breach of trust committed or intended to be committed, and either actually conceals it, or does not within a reasonable time take proper steps to protect the interests of the other beneficiaries, or
(d) has deceived the trustee and thereby induced him to commit a breach of trust,
the other beneficiaries are entitled to have all his beneficial interest impounded as against him and all who claim under him (otherwise than as transferees for consideration without notice of the breach) until the loss caused by the breach has been compensated.
When property has been transferred or bequeathed for the benefit of a married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in this section applies to such property during her marriage.
69. Rights and liabilities of beneficiary’s transferee
Every person to whom a beneficiary transfers his interest has the rights, and is subject to the liabilities, of the beneficiary in respect of such interest at the date of the transfer.

CHAPTER VII : OF VACATING THE OFFICE OF TRUSTEE

70. Office how vacated
The office of a trustee is vacated by his death or by his discharge from his office.
71. Discharge of trustee
The trustee may be discharged from his office only as follows:-
(a) by the extinction of the trust;
(b) by the completion of his duties under the trust;
(c) by such means as may be prescribed by the instrument of trust;
(d) by appointment under this Act of a new trustee in his place;
(e) by consent of himself and the beneficiary, or, where there are more beneficiaries than one, all the beneficiaries being competent to contract; or
(f) by the court to which a petition for his discharge is presented under this Act.
72. Petition to be discharged from trust
Notwithstanding the provisions of section 11, every trustee may apply by petition to a principal civil court of original jurisdiction to be discharged from his office; and if the court finds that there is sufficient reason for such discharge, it may discharge him accordingly, and direct his costs to be paid out of the trust-property. But where there is no such reason, the court shall not discharge him, unless a proper person can be found to take his place.
73. Appointment of new trustees on death, etc.
Whenever any person appointed a trustee disclaims, or any trustee, either original or substituted, dies, or is for a continuous period of six months absent from 3[India], or leaves 3[India] for the purpose of residing abroad, or is declared an insolvent, or desires to be discharged from the trust, or refuses or becomes, in the opinion of a principal civil court of original jurisdiction, unfit or personally incapable to act in the trust, or accepts an inconsistent trust, a new trustee may be appointed in his place by-
(a) the person nominated for that purpose by the instrument of trust (if any), or
(b) if there be no such person, or no such person able and willing to act, the author of the trust if he be alive and competent to contract, or the surviving or continuing trustees or trustee for the time being, or legal representative of the last surviving and continuing trustee, or (with the consent of the court) the retiring trustees, if they all retire simultaneously, or (with the like consent) the last retiring trustee.
Every such appointment shall be by writing under the hands of the person making it. On an appointment of a new trustee the number of trustees may be increased.
The Official Trustee may, with his consent and by the order of the court, be appointed under this section, in any case in which only one trustee is to be appointed and such trustee is to be the sole trustee.
The provisions of this section relative to a trustee who is dead include the case of a person nominated trustee in a will but dying before the testator, and those relative to a continuing trustee include a refusing or retiring trustee if willing to act in the execution of the power.
74. Appointment by court
Whenever any such vacancy or disqualification occurs and it is found impracticable to appoint a new trustee under section 73, the beneficiary may, without instituting a suit, apply by petition to a principal civil court of original jurisdiction for the appointment of a trustee or a new trustee, and the court may appoint a trustee or a new trustee accordingly.
Rule for selecting new trustees : In appointing new trustees, the court shall have regard (a) to the wishes of the author of the trust as expressed in or to be inferred from the instrument of trust; (b) to the wishes of the person, if any, empowered to appoint new trustees; (c) to the question whether the appointment will promote or impede the execution of the trust; and (d) where there are more beneficiaries than one, to the interests of all such beneficiaries.
75. Vesting of trust-property in new trustees
Whenever any new trustee is appointed under section 73 or section 74, all the trust-property for the time being vested in the surviving or continuing trustees or trustee, or in the legal representative of any trustee, shall become vested in such new trustee, either solely or jointly with the surviving or continuing trustees or trustee, as the case may require.
Powers of new trustees: Every new trustee so appointed, and every trustee appointed by a court either before or after the passing of this Act, shall have the same powers, authorities and discretions, and shall in all respects act, as if he had been originally nominated a trustee by the author of the trust.
76. Survival of trust
On the death or discharge of one of several co-trustees, the trust survives and the trust-property passes to the others, unless the instrument of trust expressly declares otherwise.

CHAPTER VIII : OF THE EXTINCTION OF TRUSTS

77. Trust how extinguished
A trust is extinguished-
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfilment of its purpose becomes impossible by destruction of the trust-property or otherwise; or
(d) when the trust, being revocable, is expressly revoked.
78. Revocation of trust
A trust created by will may be revoked at the pleasure of the testator.
A trust otherwise created can be revoked only-
(a) where all the beneficiaries are competent to contract-by their consent;
(b) where the trust has been declared by a non-testamentary instrument or by word of mouth-in exercise of a power of revocation expressly reserved to the author of the trust; or
(c) where the trust is for the payment of the debts of the author of the trust, and has not been communicated to the creditors at the pleasure of the author of the trust.
Illustration
A conveys property to B in trust to sell the same and pay out of the proceeds the claims of A’s creditors. A reserves no power of revocation. If no communication has been made to the creditors, A may revoke the trust. But if the creditors are parties to the arrangement, the trust cannot be revoked without their consent.
79. Revocation not to defeat what trustees have duly done
No trust can be revoked by the author of the trust so as to defeat or prejudice what the trustees may have duly done in execution of the trust.

CHAPTER IX : OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTS

80. Where obligation in nature of trust is created
An obligation in the nature of a trust is created in the following cases.
81. Where it does not appear that transferor intended to dispose of beneficial interest
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82. Transfer to one for consideration paid by another]
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83. Trust incapable of execution or executed without exhausting trust-property
Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust-property, the trustee, in the absence of a direction to the contrary, must hold the trust-property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative.
Illustrations
(a) A conveys certain land to B-
“upon trust”, and no trust is declared; or
“upon trust to be thereafter declared”, and no such declaration is ever made; or
upon trusts that are too vague to be executed; or
upon trusts that become incapable of taking effect; or
“in trust for C”, and C renounces his interest under the trust. In each of these cases B holds the  land for the benefit of A.
(b) A transfers Rs. 10,000 in the four per cents to B, in trust to pay the interest annually accruing due to C for her life. A dies. Then C dies. B holds the funds for the benefit of A’s legal representative.
(c) A conveys land to B upon trust to sell it and apply one moiety of the proceeds for certain charitable purposes, and the other for the maintenance of the worship of an idol. B sells the land, but the charitable purposes wholly fail, and the maintenance of the worship does not exhaust the second moiety of the proceeds. B holds the first moiety and the part unapplied of the second moiety for the benefit of A or his legal representative.
(d) A bequeaths Rs. 10,000 to B, to be laid out in buying land to be conveyed for purposes with either wholly or partially fail to take effect. B holds for the benefit of A’s legal representative the undisposed of interest in the money or land if purchased.
84. Transfer for illegal purpose
Where the owner of property transfers it to another for an illegal purpose and such purpose is not carried into execution, or the transferor is not as guilty as the transferee, or the effect of permitting the transferee to retain the property might be to defeat the provisions of any law, the transferee must hold the property for the benefit of the transferor.
85. Bequest for illegal purpose
Where a testator bequeaths certain property upon trust and the purpose of the trust appears on the face of the will to be unlawful, or during the testator’s lifetime the legatee agrees with him to apply the property for an unlawful purpose, legatee must hold the property for the benefit of the testator’s legal representative.
Bequest of which revocation is prevented by coercion: Where property is bequeathed and the revocation of the bequest is prevented by coercion, the legatee must hold the property for the benefit of the testator’s legal representative.
86. Transfer pursuant to rescindable contract
Where property is transferred in pursuance of contract which is liable to rescission or induced by fraud or mistake, the transferee must, on receiving notice to that effect, hold the property for the benefit of the transferor, subject to repayment by the latter of the consideration actually paid.
87. Debtor becoming creditor’s representative
Where a debtor becomes the executor or other legal representative of his creditor, he must hold the debt for the benefit of the persons interested therein.
88. Advantage gained by fiduciary
Where a trustee, executor, partner, agent, director of a company, legal advisor, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person, so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained.
Illustrations
(a) A, an executor, buys at an undervalue from B, a legatee, his claim under the will, B is ignorant of the value of the bequest. A must hold for the benefit of B the difference between the price and value.
(b) A, a trustee, uses the trust-property for the purpose of his own business. A holds for the benefit of his beneficiary the profits arising from such user.
(c) A, a trustee, retires from his trust in consideration of his successor paying him a sum of money. A holds such money for the benefit of his beneficiary.
(d) A, a partner, buys land in his own name with funds belonging to the partnership. A holds such land for the benefit of the partnership.
(e) A, a partner, employed on behalf of himself and his co-partners is negotiating the terms of a lease, clandestinely stipulates with the lessor for payment to himself of a lakh of rupees. A holds the lakh for the benefit of the partnership.
(f) A and B are partners. A dies. B, instead of winding up the affairs of the partnership, retain all the assets in the business. B must account to A’s legal representative for the profits arising from A’s share of the capital.
(g) A, an agent employed to obtain a lease for B, obtains the lease for himself. A holds the lease for the benefit of B.
(h) A, a guardian, buys up for himself incumbrances on his ward B’s estate at an undervalue. A holds for the benefit of B the incumbrances so bought, and can only charge him with what he has actually paid.
89. Advantage gained by exercise of undue influence
Where, by the exercise of undue influence, any advantage is gained in derogation of the interests of another, the person gaining such advantage without consideration, or with notice that such influence has been exercised, must hold the advantage for the benefit of the person whose interests have been so prejudiced.
90. Advantage gained by qualified owner
Where a tenant for life, co-owner, mortgagee or other qualified owner of any property by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage.
Illustrations
(a) A, the tenant for life of leasehold property, renews the lease in his own name and for his own benefit. A holds the renewed lease for the benefit of all those interested in the old lease.
(b) A village belongs to a Hindu family. A, one of its members, pays nazrana to government and thereby procures his name to be entered as the inamdar of the village. A holds the village for the benefit of himself and the other members.
(c) A mortgages land to B, who enters into possession. B allows the government revenue to fall into arrear with a view to the land being put up for sale and his becoming himself the purchaser of it. The land is accordingly sold to B. Subject to the repayment of the amount due on the mortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A.
91. Property acquired with notice of existing contract
Where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which specified performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract.
92. Purchase by person contracting to buy property to be held on trust
Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract.
93. Advantage secretly gained by one of several compounding creditors
Where creditors compound the debts due to them, and one of such creditors, by a secret arrangement with the debtor, gains an undue advantage over his co-creditors, he must hold for the benefit of such creditors the advantage so gained.
94. Constructive trusts in cases not expressly provided for
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95. Obligor’s duties, liabilities and disabilities
The person holding property in accordance with any of the preceding sections of this chapter must, so far as may be, perform the same duties, and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it:
PROVIDED that, (a) where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill and loss of time in such cultivation or employment; and (b) where he holds the property by virtue of a contract with the person for whose benefit he holds it, or with anyone through whom such person claims, he may, without the permission of the court, by or become lessee or mortgagee of the property or any part thereof.
96. Saving of rights of bona fide purchasers
Nothing contained in this Chapter shall impair the rights of transferees in good faith for consideration, or create an obligation in evasion of any law for the time being in force.

Foot Notes

1 The word “or” omitted by the Trust Laws (Amendment) Act, 1975, w.e.f. 7th. January, 1975.
2 Inserted by the Trust Laws (Amendment) Act, 1975, w.e.f. 7th. January, 1975.
3 Substituted by the AO 1950 for the words “the Provinces”.
4 Omitted by the Benami Transaction (Prohibition) Act, 1988, w.e.f. 19th. May, 1988.
5. Repealed in its application to India.
6. Repealed.
7. The figures “39″, and by implication the word “and”, repealed by Act No. 12 of 1891.

 

 




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